The United States won't take concrete steps to fight its deficit problems until around the 2012 presidential elections, which will make the dollar an unattractive investment until then, says Bill Gross, co-head of Pimco, the world's largest bond fund.
Fiscal deficits, an apparent lack of political will to address those deficits and real negative interest rates on most government-issued debt has chased Pimco from the Treasury market, with the firm underweight on U.S. debt and holding only shorter-term notes.
Treasurys have been on the rise recently although Gross insists his $1.2 trillion fund made the right call to invest in other fixed-income venues and stocks.
"If we don't own Treasurys, we own something else," Gross tells CNBC.
"I would simply say, we're having a great year. We love yields going lower because that means prices are going higher. It's the Treasury that we have a problem with in terms of their obligations and their credit quality in terms of yields."
A recent poll shows Americans are more concerned about the consequences of raising the government's $14.3 trillion debt ceiling than they are of not raising it and seeing the government navigate through a default.
Lawmakers are currently mulling raising the ceiling.
"Americans say their greater concern is that raising the debt limit would lead to higher government spending and a larger national debt than that not raising the limit would force the government into default and hurt the nation's economy," according to the Pew Research Center, which administered the poll with the Washington Post.
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