Gross On The Next Liquidity Crisis

Bond guru Bill Gross says that, once the global flood of quantitative easing ends, we could be in for another liquidity crisis.

“If we think that liquidity is poor now, it will be even worse two, three, four, five years from now when these maneuvers typically stop,” Gross told CNBC. “You would think that a central banker wouldn’t stop if they know that it would produce a crisis type of moment and lots of volatility but central banks don’t exactly know the way home.”

Gross also offered his best idea right now: Mexican government debt securities. Mexican inflation-linked bonds, are yielding about 3%, Gross tells CNBC, while the 10-year U.S. Treasury inflation-protected security is around 0.5%. “There’s a 2.5% spread between those two and believe me the quality difference doesn’t justify it,” Gross said. The trade “hasn’t worked yet but it’s only been underway for about a week or two,” he added.