Pimco’s Bill Gross says you shouldn’t own bonds now — aside from one key exception: ‘Too much debt can lead to too much risk’

His main concern is the enormous amount of government and private debt. In the U.S., government, mortgage and corporate credit now totals roughly $84 trillion, creating what Gross sees as an increasingly unbalanced financial system.

“Too much debt can lead to too much risk,” he wrote.

The federal government is a major contributor. U.S. government debt has reached 100% of GDP, which Gross described as a “peacetime high.” While heavy borrowing can support economic growth in the short term, Gross believes it has also contributed to higher inflation and could ultimately slow the economy.

But Gross isn’t abandoning bonds altogether. The only corner of the bond market he still favors is short-term Treasury bills — specifically, one-year T-bills that currently yield 4.55%.

His main concern with longer-term bonds is that investors aren’t being adequately compensated for taking duration risk, or the risk that bond prices fall as interest rates rise. Even with the benchmark 10-year Treasury yield above 5%, Gross believes the risk of owning longer-term debt doesn’t justify the return.

The bond market is already showing signs of similar concerns. So-called bond vigilantes have been demanding higher yields to hold U.S. government debt as worries mount over Washington’s fiscal position.

The bond market is becoming harder to ignore

The surge in borrowing costs since the Iran war has been difficult to contain, with the 10-year and 30-year U.S. Treasury yields recently touching multi-decade highs. The 10-year yield climbed above 5.34% on Monday and has risen by nearly 1.5 percentage points since the war began, reaching its highest level since 2002.

Perhaps more striking is that yields have continued climbing despite a much larger Treasury presence in the market. On Sept. 9, the Treasury Department announced it would triple the maximum size of its next long-term bond buyback to $6 billion, up from $2 billion, as part of an effort to improve liquidity in the market. Just weeks earlier, it had announced plans to double those buybacks. The program allows the Treasury to buy older securities that may be harder to trade and replace that debt with newly issued bonds.

The selloff has spread well beyond the U.S. Government bond yields have climbed to multi-decade highs across several major economies, including the United Kingdom, France, Germany and Japan.

“The Bond Vigilantes have gone wild worldwide, pushing government bond yields higher in developed and emerging markets alike,” wrote Ed Yardeni, president of Yardeni Research, in a note on Oct. 4.

In countries where government finances are especially weak, “bond investors are charging a fiscal-risk premium,” he said.

At the same time, the U.S. can no longer rely as heavily on the foreign buyers that once absorbed much of its new debt issuance.

Foreign investors held 35% of long-term marketable Treasury debt at the end of 2025, according to Federal Reserve data, down from 59% in 2008, when foreign governments and other official institutions played a much larger role in the Treasury market.

While foreign buyers haven’t disappeared, their role has diminished just as Washington’s borrowing needs have grown.

Gross’s concerns about excessive debt extend beyond the government, with the race to build AI infrastructure creating another potential source of risk in the corporate sector as well.