This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

U.S. Able but Unwilling to Pay Bills: Analyst

But in June, after he was hammered for missing this year's rally in Treasuries, Gross increased the fund's allocation to the asset class to 8% from 5%. In an op-ed in Thursday's Washington Post, Gross addresses the debt-ceiling battle by urging regulators to "raise it unencumbered if necessary."

"Pimco owns very few Treasury securities, and its clients would theoretically benefit if yields rose on an under-owned asset class that was technically in default," Gross wrote. "But default would still be a huge negative for the U.S. and global financial markets, introducing fear and unnecessary volatility into the economy and global trade. The market situation might resemble what happened after Lehman Brothers collapsed in 2008."

Schwab's Jones highlights the risk that the cost of borrowing for the U.S. government will rise in the event of a default. "It doesn't mean it will rise permanently or significantly, depending on how this business plays out in Washington," she says. "But whether it's your credit score as an individual, or credit rating of a company or a credit rating of a sovereign government, if it drops, your borrowing costs go up."

For individual investors looking for guidance during this time of uncertainty, Jones assures that the 10-year Treasury is still safe, "although we can argue about whether the yield is attractive or not for a long-term investor."

Jones recommends that individual investors should keep a ladder portfolio "so they stretch maturities out over the yield curve, and you're not committing to one particular place. You'll have the longer-term securities that provide you income and short-term ones that you can roll over should rates rise."

For those investors looking for a little extra yield, Jones says they should consider high-grade, investment-grade corporate bonds. "They'll yield somewhat over Treasurys and they'll typically have very attractive credit ratings," she says. "The corporate sector has a lot of cash on the balance sheet and are in pretty good shape fundamentally, so a lot of investment-grade bonds are very attractive."

-- Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

>To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%
TSLA $266.15 0.00%
YHOO $36.67 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs