Bill Gross, co-chairman of PIMCO, the world’s largest fixed income group has soberly pegged this economic environment a “mini depression.”

Gross is worth heeding. He is the dean of bond investing in the United States for more than three decades and has made some prescient calls on interest rates and other macroeconomic trends. No other bond fund manager has produced better results than his flagship PIMCO Total Return Fund.

In an interview with Bloomberg television, Gross says the United States will require “trillions of dollars to avoid a mini depression.”

About the only regrets Gross has lately is not having increased his holdings of U.S. Treasury bonds over the last 18 months – the best performing segment of the bond market.

Still, the veteran manager loaded up on mortgage agency debt prior to the Paulson GSE guarantee last fall, resulting in big profits for his investors. GSEs are Government State Enterprises, including Fannie Mae and Freddie Mac. While shareholders of these two largely insolvent mortgage lenders have almost been wiped-out by massive losses, bondholders have fared well supported by rising prices, coupon payments and an implicit guarantee by Uncle Sam honoring their outstanding debt.

Gross is bearish on the U.S. economy.

Over the last several months a host of economic data in the United States continues to point to the worst contraction in output in almost 30 years. Housing, domestic consumption, unemployment and other data all show an economy still in the process of hemorrhaging. Overseas, many economies are also suffering with several countries requiring IMF bailouts, including Ukraine, Hungary and Iceland.

The United States is projected to issue almost $2 trillion dollars’ worth of Treasury debt this year to finance bailouts and fiscal spending plans. Next year, Treasury expects to issue more than $1 trillion dollars. In Europe, governments plan to raise more than $1.3 trillion dollars and possibly more in 2010.

Recently, U.S. bond yields have risen sharply from 2% in December to about 2.90% now as the market comes to grips with unprecedented Treasury supply. It’s the same story overseas where longer term rates have ratcheted higher since early January and, in some cases, countries have failed to meet regular bond auction targets as investors balk at rising supplies.

Have a good weekend. See you on Monday.