'Risk Avoidance" is the headline on a Wall Street Journal "Heard on the Street" column item that reports the holdings of U.S. government bonds in Pimco's Total Return Fund soared to 44% at the end of August as compared to 25% at the end of July. The Journal says "Risk appetite is back with a vengeance. Not, it seems, for" Pimco. The Journal seems to be buying into the idea that U.S. Treasury bonds are low risk, or even no-risk. Traditionally U.S. Treasury bonds have had low risk of default, but they certainly aren't risk-free. Except for TIPS, they are subject to inflation risk. And while it may seem a remote possibility, the risk that the Treasury would default on certain government debt is not so remote that it isn't being discussed in some corners of Wall Street. Most see inflation/dollar devaluation as a more likely scenario because it avoids the public embarassment of a default. But these are risks, and someone investing in U.S. government bonds isn't avoiding those risks, he's embracing them.