Bill Gross warns about falling inflation expectations in the US

FXStreet (Mumbai) - The action in the Treasuries shows inflation expectations are falling in 2014 by the most in three years. Famed bond investor Bill Gross warned investors to brace up for a period of falling prices. “Deflation is a “growing possibility” as governments worldwide struggle to stimulate their economies”, said Bill Gross.

The difference between yields on 30-year debt and similar-maturity Treasury Inflation Protected Securities, a gauge of inflation expectations, was 2.08 percentage points. The spread has shrunk 28 basis points in 2014, the most since 2011, and declined to 1.99 percentage points last month, the least in three years. The falling spread indicates an increased possibility of a period of falling prices ahead.