Bill Gross, founder of PIMCO, says the differences between the U.S. and Japanese economies show why interest rates here have nowhere to go but up.

Speaking at the Morningstar Investor Conference, Gross noted that U.S. Treasuries are yielding 1.55%. 'Compare it to the Japanese market which we know is a moribund, dead, lost-decade kind of economy,' Gross said, 'and the Japanese bond yields .8%. Here we have the US with a dynamic economy, … with respect to their Treasury departments, the U.S. and Japan are just 80 or 90 basis points apart.'

'Unless we cataclysmically black-hole our economy and drive it far into further recession, it’s hard to see how we could drive [domestic] interest rates much lower.'

Bond rates fell Wednesday on continuing fears of a slowdown in the U.S. economy following downbeat comments from Fed Chairman Ben Bernanke Tuesday.  Yields on 10-year Treasurys 10-YEAR fell below 3%,  while those on the 2-year note 2-YEAR flirted with their all-time lows, set last November.

Gross has been an outspoken bear on U.S. Treasurys in recent months, arguing that they don’t reward investors enough for the risk they carry."

-Chuck Jaffe