By Tom Bradley

In his monthly letter, Bill Gross, the Managing Director of PIMCO and acclaimed ‘King of Bonds’, suggested that the Federal Reserve’s QE2 announcement last Wednesday (the second round of Quantitative Easing) “will likely signify the end of a great 30-year bull market in bonds.” In response, Mr. Gross talked about PIMCO's ‘safe spread’ strategy, which “offers no guarantees ... [but] is designed to let you sleep at night with less interest rate volatility.”

Mr. Gross is the master of creating new labels and catch phrases. After the financial crisis, his ‘New Normal’ was used extensively. I don’t know if ‘safe spread’ will catch on, but if it does, I want to be the first to define it.

safe spread [seif spred] / noun

1. buying high-quality corporate bonds, emerging market bonds and other bond-like products to eke out a little more yield.
2. taking more risk than usual with fixed income investments to achieve less yield than usual.
3. considered an oxymoron, given that ‘spread’ is an investment term that refers to risk.

Related: middle-age spread, prudent risk, safe sex, inadequate spread.