(MONEY Magazine) – Bond King Bill Gross, manager of the $94 billion Pimco Total Return fund and the MONEY 65's Harbor Bond fund, predicted last summer that the Fed wouldn't raise short-term rates above 3.5%. (Rising rates are bad for bond prices.) In March, new Fed chief Ben Bernanke hiked 'em to 4.75%. So how about it, Bill? "Like anybody who's been wrong, I'm basically saying there's just one more round," says Gross, meaning he thinks the pain will stop at 5%. He still frets more about a potential economic slowdown than a rise in inflation. Gross' cloudy crystal ball isn't hurting him. With stakes in mortgages and emerging markets bonds, which aren't so affected by Fed moves, Harbor is beating two-thirds of similar funds in '06.