Why I Prefer Select Corporate Bonds to Treasuries

Why I Prefer Select Corporate Bonds to Treasuries
“We need an emergency break-the-glass plan, which is targeted and short-term, on the shelf, so it’s ready to go when we hit the wall,” former Secretary of the Treasury Henry Paulson, on April 16, 2026, speaking about U.S. Treasuries.

​Let’s break down what this means, why Paulson said it and why I’m loaning money to the Magnificent 7 (with a notable exclusion) instead of buying U.S. treasuries. I’ll also include information on how to avoid paper losses on your fixed-income investments.
 
Here is what I’ll cover in this blog.
 
Side-by-Side Comparison
Keep the Terms Short and the Creditworthiness High
Not all Corporate Bonds are Created Equal
Hank Paulson Warning
Lessons from The UK Gilt Crisis
The Strengths of the United States
Takeaways
 
And here is more information on each point.
 
Side-by-Side Comparison
As you can see in the chart below, the United States is running a sizeable deficit, and the total debt and loans are an eye-popping $107.6 trillion (source: FRED). The $38.9 trillion in public debt is what politicians rant about incessantly. However, that excludes corporate debt and loans, bank debt, consumer debt and state and local government debt.

​By comparison, the six Magnificent 7 companies I’ve included above (Walmart is not in the Magnificent 7) all have much higher revenue growth and profit margins. They also have healthier debt to equity ratios.
 
Keep the Terms Short and the Creditworthiness High
Whether we choose treasuries or corporate bonds, it’s very important to keep the terms short and the creditworthiness very high. There is just too much risk (credit and duration) in the marketplace. That is why long-term government bonds lost even more than Stocks did in 2022. This problem was also at the heart of the five banks that failed in early 2023.

Bond performance since then hasn’t been enough to recover those losses. You probably have heard the term “paper losses” in your own portfolio, which are far more problematic than we’re being told. We are very proud to report that the fixed income strategies that we’ve been teaching at the Financial Freedom Retreat for decades have not reported paper losses.
 
Not all Corporate Bonds are Created Equal
There is another screen that is important to use in addition to the high credit quality and short duration. We are leaning into 21st century companies and underweighting the legacy brands that were founded last century. The reason for that is that even within the same credit rating, there can be a quite different profitability and leverage profile. Older companies tend to have slower revenue growth, squeezed profit margins, and typically a lot more debt and leverage. You see all of this in Walmart’s numbers in the chart above. Yet S&P Global has assigned an AA credit rating to the company.
 
If you do not want to do the proper due diligence to investigate all of this, then just skew for new. It’s an easy hack that works very well alongside the mantra, “Keep the terms short and the creditworthiness high.”

Hank Paulson Warning
Paulson’s warning wasn’t all doom and gloom. “We’ve got the biggest, most innovative, diverse economy; we’ve got the strongest, best-governed, most profitable companies; we live in a safe neighborhood; we’re energy independent,” Paulson said. However, the debt, fiscal and political challenges, along with the rise in nationalism, could mean that interest rates have to rise or risk that the Federal Reserve Banks are the only buyers of treasuries. This is why Paulson is warning that the central bank and Treasury Secretary need a break-the-glass plan.
 
It’s important to remember that this plan is always paid for by the taxpayer. An anonymous Wall Street whale wrote to me by text, “And when they ‘break the glass,’ it’s always someone else’s glass. Avoidance of the expensive decisions when problems are solvable become the very expensive “solutions” when they are near beyond solving. The former deferred by the powerful, the latter born by the powerless.”
 
Lessons from The UK Gilt Crisis
When yields rise rapidly, value plunges. This creates chaos, margin calls, and, if sustained, a mark-to-market valuation that could put various investors (institutional, financial, pension providers and otherwise) into a crisis of liquidity (and potential risk of liquidation). We saw this in the U.S. in 2023 with the bank failures. It also happened with U.K. Gilts (similar to U.S. Treasuries) in September of 2022. Duration risk expounds the problem. As you can see in the liquidity chart below, the longer the duration, the less liquidity there is.

I bring up the U.K. gilt crisis because it lasted only 5 days. The Bank of England stepped in to buy £65 billion in long-term gilts, stabilizing the price and short-circuiting the spiral into a doom loop. This is the kind of plan that Hank Paulson is thinking about. It’s not a long-term fix. It’s a temporary solution financially engineered to stabilize the economy, in the hopes that the politicians will fix the national debt and budget deficit problems and that the heavily indebted corporations will get back to fiscal health and stability.
 
 
The Strengths of the United States
There are many strengths of the United States, including that our entrepreneurs can find capital funding for their innovative ideas. One example of this is in the air taxi sector. Just a few years ago, many European air taxis ran out of cash and were forced to liquidate. Meanwhile, even though this is a disruptive industry with little or no revenue, the American companies Joby ($2.5 billion) and Archer Aviation ($1 billion) are publicly traded and should have enough cash on hand to get them through the necessary fast-tracked final stages of the federal aviation requirements before they can start operating officially and charging for their service.
 
The Magnificent 7 companies are the most valuable in the world, with products and services that are used globally. The U.S. is known for inventing and scaling the solutions of tomorrow. Yes, there are competitors, including China’s investment in AI, EVs and smart phones. However, innovation, combined with being bordered by two oceans, a rich and deep capital market and the economic freedom policies that support entrepreneurialism are unique and valuable American assets.   
 
Takeaways
There is a lot of debt in the U.S. and the world. There is also a great deal of risk, including war, inflation, natural disasters, political uncertainty and nationalism. Interest rates are still low, at under 4%. Yet, 3.5% return on $1,000,000 is $35,000 every year. If we can earn money while we sleep without losing any of our principal (in other words no “paper losses”), then it is a worthy endeavor, particularly since we should all be keeping an age-appropriate amount of our wealth safe from capital losses.
 
Bottom Line
It’s important to always keep our principal intact, while earning some income. It is the safe side of our wealth plan that protects us when stocks head south -- allowing us to keep our money and have the liquidity to buy low when the opportunity arises.  (Most people don't buy low because they can't.) As Will Rogers was fond of saying, “I’m more concerned with the return of my money than the return on my money.” In today’s Debt World that saying is quite relevant.
 
Getting a safe 3.5-3.9% return on investment is not difficult, but it is tricky in today’s Debt World. This is why we spend one full day on What’s Safe? at the Financial Freedom Retreat. Keep the terms short. Keep the creditworthiness high. Lean into the future and underweight the past. Have rolling maturity dates. Know when you’ll need access to your money.

If you have paper losses, or if you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing information on our private coaching. You can also register for our June 5-7, 2026, Financial Freedom Retreat. Sign up by May 15, 2026, for the best price.
 

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​Are you aware that the hot funds we've been featuring in our sample pie charts and retreats performed at the top of Wall Street in 2025? Silver tripled. Peru (copper) was on fire with over 100% gains. Even clean energy scored 55%... 

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Natalie Wynne Pace is an Advocate for Sustainability Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of The ABCs of Money for College are the most recent releases of these books. Follow her on Instagram. 
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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.