Just a Singer in a Rock & Roll Band, by Bill “bond market wiz” Gross:

“[In 2004] we managed to avoid extreme duration statements and instead profited by shifting money into reflationary beneficiaries in the U.S. (TIPS) and near deflationary economies outside our borders (Bunds). [In 2005] the dominant moneymaking themes in the bond market should be the following: 1) The Fed stays relatively low, 2) China revalues its currency, 3) Spread product underperforms, 4) Europe remains sick, and 5) Cash is Prince.”

“The successful 2005 bond strategy therefore, will likely be to avoid duration, avoid spread product and to flock to the stability of cash, TIPS, and foreign bonds issued by strong currency countries in an openly reflationary world. If so, bond market returns of 3-4% for the year may be all an investor can rationally expect, and if those Asian investors flee for the exits then longer duration portfolios might even wind up in the red.”