Courtesy of Mish.
On October 1, Bill Gross stated U.S. Will Avoid ‘Catastrophic’ Default on Debt, stating the odds of a default are “a million-to-one”.
Is that reality, or is Bill Gross talking his book?
The answer is yes, to both. The odds of default are probably far greater than a million-to-one.
“The Treasury is not going to default on their debt simply because the debt ceiling isn’t going to be raised. There will be other repercussions like slower economic growth. But the Treasury is not going to default.” said Gross.
I strongly agree. I suggest the debt ceiling will be raised by October 17, and probably a lot sooner.
Moderate Republicans will cave in soon. But even if they don’t, there will not be a treasury default.
Where are Treasury Yields Headed?
With default silliness, out of the way, let’s turn our focus on a far more serious question: Where are Treasury Yields Headed?
Reuters reports Pimco’s Gross: Low interest rates may persist for decades
Bill Gross, manager of The Pimco Total Return Fund, said on Wednesday that the global economy may be facing low policy rates for decades.
Gross wrote in his October investment outlook that investors should “bet against” expectations that the federal funds rate – the U.S. Federal Reserve’s benchmark short-term borrowing rate – will rise by one percentage point by late 2015.
“The U.S. (and global economy) may have to get used to financially repressive – and therefore low policy rates – for decades to come,” wrote Gross, a co-founder and co-chief investment officer at Pimco, whose flagship Pimco Total Return Fund has roughly $250 billion in assets….
