Bond investor Bill Gross shared his market views on CNBC's "Power Lunch" Wednesday.

"We're hearing potentially we got a trillion-and-a-half-dollar potential deficit from this [tax reform] package," the Janus Henderson Investors portfolio manager said in the interview. "A trillion and a half dollars is a lot of money."

The investor explained how higher budget deficits can have negative implications for bond values.

"To the extent that it produces inflation," he said. "It reduces the value of all existing debt. It basically raises interest rates or lowers bond prices. That's the ultimate effect. To be fair, we haven't seen that yet [higher inflation]."

He also believes some of tax reform's positive benefits are priced into the stock market already.

"Fiscal policy now in addition to monetary policy for the past five, six years is an important factor and I think we're seeing that in stock markets that are anticipating lower taxes going forward," he said.

Gross is the portfolio manager for the firm's Global Unconstrained Bond Fund. Previously, he co-founded and was chief investment officer of Pimco.