Treasury prices have been rising in recent sessions, and Bill Gross, chief investment officer at fund giant Pimco, believes the move stems from the Federal Reserve's determination to keep short-term interest rates low for a long time.

The 10-year Treasury yield dropped to a 6 ½-month low of 2.47 percent Wednesday. The yield stood at 2.51 percent Monday morning.

Pimco put out a report last week saying the global economy has shifted from the "new normal" to the "new neutral." In the new neutral, sluggish economic growth reigns for the next three to five years.

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A 2.5 percent yield for the 10-year Treasury "currently reflects a 0.5 percent new neutral rate and seems fair for now," Gross tells MarketWatch. Presumably, 0.5 percent refers to the Fed's federal funds rate target, which currently stands at zero to 0.25 percent.

While he views the recent decline in Treasury yields as justified, Gross tells MarketWatch he doesn't expect the 10-year yield to hit 2 percent.

Meanwhile, the market consensus is that the fed funds rate is headed to 3 or 4 percent in the next three to four years. But Gross sees it topping out at 2 percent.

As for the Fed, Harvard economist Larry Summers, a former top adviser to President Obama, is concerned that the central bank's easing program could hurt the economy.

"Low interest rates could become a source of instability down the road," sparking bubbles in assets markets, he said at an investment conference last week, Fortune reports. 

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