In a new video, Dan Ivascyn, Group CIO at PIMCO, shares the latest market views from PIMCO’s Investment Committee. He explains why volatility creates a target-rich environment in fixed income, and reveals how to build a resilient portfolio which capitalises on opportunities across public and private markets.
In the video, Dan touches on a number of key points, including on tariffs, where he says:
“You do not only have uncertainty here in the United States, but you have a lot of uncertainty in terms of relationships with other countries, impact on markets. And that’s creating not only a lot of localized volatility but volatility across countries, across sectors, across yield curves and that’s a great opportunity as well. So I think the key theme going into this year is to have a healthy degree of humility around the uncertainty. Acknowledge the uncertainty, but look to take advantage of the full global opportunity set, both within the liquid higher quality areas of the market, as well as in some of the more credit sensitive areas as well.”
On inflation and the outlook for the Fed, he says:
“Our inflation outlook for the remainder of the year is that we still are well above central bank targets or at least in the closer to 3% than 2%. And that creates a lot of uncertainty from the Fed as well. Our base case view on the Fed is the Fed’s going to be on hold for the foreseeable future.”
In regards to fixed income, Dan added:
“I think it’s important to note that fixed income’s cheap, attractive from a historical perspective. Equities and credit spreads are not, they’re quite tight. You don’t have to take a tremendous amount of interest rate risk. You don’t have to extend out the curve to very, very long maturities. You can focus on an intermediate-term duration portfolio with a little more interest rate risk than you would’ve had a few years ago when there was this valuation cushion.”
On the topic of credit markets, he says:
“This has been a time over the last few months where spreads are tight, markets are extremely liquid, and you can shift out of the most economically sensitive areas of the market. You can avoid some of the floating rate lower quality credit markets in favor of markets that have better fundamentals.”
To watch the full video or read the transcript, click here.
Dan Ivascyn
