NEW YORK (CNN/Money) - The global economy will continue to see tepid growth in the coming years as huge debt burdens restrain spending and stocks will reflect this "slow burn", according to the manager of the world's largest bond fund.

Companies will increasingly use cash to pay off debt or build reserves and continue to shore up underfunded pension plans, which will reduce investment spending and make for a slow economic recovery, PIMCO's Bill Gross wrote in a commentary released late Wednesday.

Gross added that interest rates and inflation will remain low--2 to 3 percent over the next 3 to 5 years-- and in this environment, holding Treasurys as they mature and appreciate in price will provide modest returns.

He also said the 3- to 5-year time frame will be an attractive holding period to own Treasury Inflation Protected Securities (TIPS) as they will guard against any inflation excess.

"The days of eating salad may be over, but 5 [percent return] is ample sustenance in a low inflationary environment," Gross wrote.

U.S. stocks, Gross said, remain more than fully valued using various valuation standards.

The U.S. economy still faces risks, including another terrorist attack that would be "calamitous," unregulated hedge funds, and credit derivatives, according to Gross. He also took a shot at Federal Reserve Chairman Alan Greenspan, saying his view that derivatives are beneficial is "clearly off base."