The Federal Reserve's zero-interest-rate policies are making it impossible for investors to make money by holding Treasurys, Pimco's Bill Gross told CNBC.
Speaking on the same day that Standard & Poor's issued an attention-grabbing downgrade of its own outlook for US debt, the CEO at bond giant Pacific Investment Management Co. said other countries' debt is far more attractive than US notes.
"Hopefully we'll become optimists," said Gross in an on-air interview. "But our sense is to put investors into sovereign credits, namely Germany and Canada and Brazil, where their balance sheets are more pristine and where the outlook in terms of real economic growth going forward is better."
S&P held its AAA rating on US debt but warned that there is a 1-in-3 chance of default and issued a negative outlook.
Gross denied speculation that he had any influence on the S&P move—observing that "S&P and Moody's and Pimco are not necessarily good friends"—but said it's no secret that investors are getting a bad deal from the US.
With the Fed sticking to low rates that means investors are getting a negative real return compared to the rate of inflation.
"Policy rates basically pick the pockets of investors," Gross said. "It means investors aren't getting what they should from Treasurys."