Further Interest Rate Hikes Will Roil Markets, Says Billionaire Bill Gross

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Bill Gross
Bill Gross

Famed investor Bill Gross said he sees mayhem ahead if the Federal Reserve keeps increasing interest rates.

“The economy has been bolstered by tremendous amounts of trillions of dollars in fiscal spending, but ultimately when that is used up, I think we’ve got a mild recession, and if interest rates keep going up, we’ve got more than that,” Gross said Tuesday on CNBC’s “Halftime Report.”

“We’ve got potential chaos in financial markets,” he said.

A tightening of monetary policy would further weigh down on capital markets, according to Gross. The so-called “bond king” and co-founder of Pimco pointed to Tuesday’s move in global bond yields following the Bank of Japan’s decision to widen the yield on its 10-year Japanese government bond.

Meanwhile, further hiking of interest rates sparks more problems for commercial real estate, which could encounter“potential defaults” ahead, Gross said. Nonetheless, he believes that residential real estate will cope somewhat better, and will not be crashed to the degree that it was during the Great Recession.