US regional banks shares surge after Bill Gross says they have hit bottom

By David Randall

NEW YORK (Reuters) – Shares of a handful of U.S. regional banks popped on Thursday after famed bond investor Bill Gross said the danger in investing in them had passed.

Gross, a billionaire once known as the “Bond King” after founding fixed income giant PIMCO, said he was buying shares of Truist Financial (NYSE:), Citizens Financial (NYSE:) Group, KeyCorp (NYSE:), and First Horizon (NYSE:). Shares of each company jumped by 6% or more, outpacing the 3.5% gain in the Banks index.

“Regional bank falling knife has hit bottom,” Gross wrote on a message on X, the platform formerly known as Twitter.

Regional banks have been under pressure from the steep selloff in Treasuries, which pushed yields near 16-year highs and dampened the demand for mortgages and other forms of consumer credit. Benchmark 10-year Treasuries rallied Thursday, with yields falling to three-week lows, following smaller than expected Treasury issuance and signals from the Federal Reserve that it is done with its hiking cycle.

Gross wrote on Oct. 23 that he was “seriously considering regional banks again” but cautioned that “it hurts if done too early.” He followed up on Oct. 30 and said that some shares offered “extraordinary long term value.”

Along with regional bank shares, Gross wrote he expects the yield curve to turn positive over the next six months, making 2-year Treasuries more attractive than 10-year Treasuries. The yield curve has been inverted for more than a year, with short duration bonds yielding more than long-duration. Historically, yield curve inversions signal an upcoming recession, and tend to once again turn positive slightly before or at the moment of a recession.