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Gross exit ripples bond market

Market 'over-reacting' to Bill Gross news: Pro

The sudden exit of Bill Gross from Pimco sparked a knee-jerk selloff in the Treasury market, a drop in Pimco closed-end funds and rallies in competitors' shares as traders gamed whether the world's largest bond house would see an exodus of investors and a repositioning in its funds.

He will be succeeded by Daniel Ivascyn, the company announced later on Friday.

Treasury yields moved higher, with the 10-year going from about 2.50 to 2.54 percent, before retreating back to 2.52 in midmorning trading.

Read MoreBill Gross jumps to Janus

Gross, who ran the Pimco Total Return Fund, the largest bond fund, announced his immediate departure for Janus Capital Management where he will manage the Janus Global Unconstrained Bond Fund (JUCAX) and will be responsible for building out the firm's global macro fixed income strategies. Janus stock surged 36 percent, and rival BlackRock jumped 3 percent.