August 28, 2019 – In a report issued this week, PIMCO’s Dan Ivascyn and Esteban Burbano discussed the current U.S. interest rate rally and PIMCO’s outlook.
A couple trends were noted by Ivascyn:
- Slowing growth around the world
- Uncertainties on trade
- Potentially more limited tools outside of monetary policy that can be used to stimulate economies
- The political viability of fiscal stimulus
Over the next 12-24 months, Ivascyn commented:
“We have become a bit more cautious in our outlook. We’re not yet ready at PIMCO to declare that a recession in the U.S. is imminent, but we expect the economic data to remain weak, especially while we have such uncertainty around trade.”
Keeping in mind the primary goal of delivering responsible income, PIMCO’s Income Fund has increased holdings in housing-related investments relative to generic corporate credit while also reducing interest rate exposure in view of lower long-term bond yields.
The fund’s defensive position in duration and corporate credit; as well as exposure to emerging markets, have hurt the fund this year, but PIMCO is “comfortable maintaining a defensive duration position and lower exposure to generic corporate credit”.
Read the interview on PIMCO’s website.
Contact Jim Doe at JDoe@buymuni.com.
