Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., said value is diminishing in credit markets and that relative yields may rise.

Mortgage and high-yield corporate debt is "overvalued," making Treasuries and investment-grade company debt attractive, Gross, the co-founder and chief investment officer of Pimco in Newport Beach, Calif., said last week.

Emerging-market debt is appealing to "some extent," he said.

The sustainability of the U.S. economic recovery by the private sector after government stimulus programs end remains in question, Gross said. The Federal Reserve's plan to complete its mortgage purchase program will hurt returns on those securities, he said.

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