Goldman Sachs squares off with Bill Gross

Bill Gross said German bunds are the 'short of a lifetime', Goldman says to buy

One-time bond king Bill Gross helped restore his reputation last year with a nearly-perfectly-timed call to short German bunds.

Now, Goldman Sachs says that time is up. They recommended buying bunds today, although not outright.

They recommend long bunds and short US Treasuries on a spread trade. The current spread is 155 basis points. They target a retest of the March wide spread of 190 bps with a stop at 130 bps.

The reasoning is simple (which is usually the sign of a good idea): Expectations for Fed hikes will continue to rise, pushing up the front end of the US yield curve.

But in that case, why not just sell the front end?