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Market fears that the U.S. is at risk of losing its AAA credit rating is sending the dollar, stocks and bonds under severe selling pressure on Thursday, Bill Gross, co-chief investment officer of PIMCO told CNBC.
"I don’t think it will happen quickly, but I think the market views the possibility as an increasing one," Gross said. "I mean, the U.K. was downgraded last night, and the market views those two countries, the U.K. and the U.S., as relative twins."
A number of factors play into a country’s rating, Gross told CNBC, but outstanding debt as a percentage of GDP is a huge part.
Both the U.K. and the U.S. are moving toward much higher debt, and if the U.S. continues in that direction, in five years it could face a debt in GDP of 100 percent — numbers typically associated with countries that have lower than AAA ratings.
Gross suggested investing in municipal and high-quality corporate bonds and stocks of companies that have stable dividends and increasing earnings.
-- Reuters contributed to this report
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