Stresses in the high-yield bond market mark the start of a new trend, according to bond expert Bill Gross, but it's not necessarily cause for panic.
Anxiety about junk bonds were fired up on Friday after investment firm Third Avenue Management froze investor withdrawals from its nearly $1 billion junk bonds fund. Amid turmoil, the company announced its separation from CEO David Barse on Monday. Uncertainty persists ahead of the Federal Open Market Committee meeting this week.
These comments echo previous remarks Gross has made regarding the high-yield market being less liquid than some assume. "It's the start of something, not necessarily something bigger," Gross, portfolio manager at the Janus Global Unconstrained Bond Fund, told CNBC's "Power Lunch" on Monday.
Yet while Gross said it's hard to know the overall impact of the new trend, he acknowledged that there is tension in the market.
"There's no doubt that mutual funds and ETFs are, in some cases, strained for liquidity," Gross said. "High-yield credit doesn't do well as highly levered companies find it difficult to cover interest expenses."