We at PIMCO look for a Fed Funds rate of 4¼% by December of 2007 with 5 and 10 year yields hovering at levels perhaps 25 basis points higher. While that by no means would be reflective of past bond bull markets in terms of magnitude, that is not to imply that 12/31/07 would mark its last gasp.
I happen to like and respect Bill Gross and his arguments in this commentary are pretty convincing. However, Bill Gross is also a bond manager in a 25 year bull market in bonds. I don't know if he's right or wrong about rates this year - I suspect not- but he'd be a fool to predict anything else.