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Pick Corporate Credit Over Treasurys: Roubini's Sanchez

Matt Clinch, special to CNBC.com
Tuesday, 17 Jul 2012 | 4:22 AM ET

Investors should be looking at investment grade corporate credit rather than Treasurys, Gina Sanchez, Director of Equity and Asset Allocation Strategy at Roubini Global Economics told CNBC.

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Sanchez maintains a bearish stance on commodities and high-yield bonds and favors investment grade bonds despite the lower returns.

“We think high-yield is probably going to become a dodgier and dodgier place,“ she told CNBC’s “Worldwide Exchange”.
“We’re obviously recommending an underweight to equities and an underweight to Europe. That overweight we're taking actually in credit, rather than Treasurys, because you could at least still get paid there,“ she said.

She conceded that it’s a difficult decision to make in this climate and the yields for these bonds are low.

In a separate researched note Roubini explained that they still remain overweight on U.S. municipal bonds and global sovereign debt.

Despite favoring investment grade bonds over Treasurys, Treasurys are still preferred over shares with Robini currently selling equities in favor of Treasurys.

They are currently selling equities in favor of Treasurys as they believe the economic slowdown is real and problems in the euro zone are far from over.

“One place we look at on a tactical basis is on some of the U.S. dollar denominated emerging market debt, that has certainly fared well over the last few weeks,” she said adding that it’s probable the dollar will strengthen as she continues to see fear and uncertainty in the markets.

She finished by underlining her view that investors should opt for stability where they can find it with the chronic problems that persist in the economy.

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