On Thursday, after renowned investor Bill Gross, known as the "Old Bond King," stated that the danger of investing in some regional banks in the United States had passed, many of the bank stocks he favored saw a surge in stock prices.
Gross, who founded the global fixed income giant PIMCO, said he is currently buying Truist Financial, Citizens Financial Group, KeyCorp, and First Horizon, all of which have seen their stock prices jump at least 5% on Thursday, outperforming the 3.5% increase in the S&P 500 Banking Index.
Gross wrote on the X platform, 'The knives of regional banks have hit the bottom.'.
Since the beginning of this year, the stock prices of regional banks in the US stock market have been under pressure from the storm of US bond selling. The 10-year US bond yield once exceeded 5% last month, reaching a 16-year high, which has suppressed the demand for mortgage loans and other forms of consumer credit.
However, recently, the US long-term bonds have rebounded for several consecutive days, and the 10-year US bond yield fell to a three week low overnight. Earlier this week, the US Treasury Department announced that the growth of long-term treasury bond bond supply in the fourth quarter was lower than expected, and the signal released by the Federal Reserve's resolution was interpreted by the industry as dove, which greatly relieved investors in the US bond market.
It is worth mentioning that Gross wrote on October 23rd that he is "seriously considering regional banks again". But he also warned at the time that 'if you enter too early, you will suffer harm'.
He followed up on October 30th and stated that some stocks offer "extraordinary long-term value".
In addition to regional banking stocks, Gross also wrote on Thursday that he expected that the yield curve of US Treasuries would end in the next six months, making two-year treasury bond bonds more attractive than 10-year treasury bond bonds.
At present, the yield curve of US Treasury bonds has been inverted for over a year, and the yield of short-term bonds is higher than that of long-term bonds. From a historical perspective, the inverted yield curve indicates that the economy is about to decline, and often returns to normal before or during a recession.