Long-Term Bond Bull Bill Gross Goes Bearish ...

Stop the presses: Pimco's Chief Investment Officer, Bill Gross, is reportedly going bearish on bonds, per Reuters. He has been a bond bull for 25 years and manages the world's largest bond fund. Wow. Gross now expects inflation will accelerate mildly and believes 10-year T-Note yields will range from 4% to 6.5% instead of 4% to 5.5% over the next 3-5 years.

For the day, long bonds finished the day down 1 11/32 in price. Percentage wise, that was a decline of about 1.24%, the biggest one-day drop in more than 26 months. The yield on the 10-year Treasury Note closed at 5.10%, the highest since July 18, 2006.

Here's some more coverage on the dramatic bond market action from Bloomberg and Marketwatch. As both articles make clear, some of today's decline stems from heavy mortgage-related selling. But the longer-term catalysts that got the bonds heading lower in the first place, in my view, are the ones I spelled out earlier.