Bill Gross, head of the world's largest bond fund Pacific Investment Management Co (PIMCO) , feels that long-term bond yields will be pushed higher than short-term rates in both the US and the Eurozone due to the reflation (government policy measures aimed at intentionally reversing deflation and increasing a country's output) that is already in progress.

In a tweet published last night, Gross indicated that he expects bond yield curves "to be very steep in the US and Euroland for a very long time" because reflation is already underway.

This belief leads him to conclude that short-term rates will be low with higher long-term rates.

The PIMCO chief already indicated in a Bloomberg interview last week that he expects the Federal Reserve to either give "strong hints" or take "positive action" at Thursday's meeting.

Specifically, Gross is looking for the monetary authority to ease further via "open-ended" Treasury and mortgage purchases and also to extend its promise to keep rates low into 2015. This would mark a change from the current language which states "at least through late 2014."

JM

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