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PIMCO is one of the world’s premier fixed investment managers. Since our founding in 1971 in Newport Beach, California, we have grown into a global organization with more than 2,150+ professionals united in a single purpose: creating opportunities for our clients in every environment. Our focus on excellence and our short- and long-term track record has encouraged institutions, financial advisors and millions of individual investors to entrust us with their assets. Visit PIMCO’s blog. Subscribe To Get PIMCO Insights Delivered Directly to Your Inbox.

PIMCO

September 25, 2019

September Fed Meeting: Divisions Over the Path of Policy

As expected, the Federal Open Market Committee (FOMC) reduced the fed funds range by another 25 basis points to 1.75%–2.00% at its September meeting, making this the second cut since the Federal Reserve stopped hiking interest rates last December. However, we see two bigger takeaways from Wednesday’s meeting. First, Fed officials remain divided on the appropriate near-term path for interest rates; and second, the Fed could announce a change to its current balance sheet policy as early as October.

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PIMCO

September 18, 2019

Saudi Oil Site Attacks Exacerbate Tightening Supply, Add to Price Risk Premium

Oil prices surged Monday after attacks on Saudi Arabia’s Abqaiq processing plant and Khurais oil field Saturday suspended more than half the country’s oil production. While the ultimate impact will depend on a combination of the extent of damage, the U.S. and Saudi response, and whether further attacks occur, the current production decline will exacerbate the tightening in the oil market that was already underway and could add a more lasting geopolitical risk premium to prices.

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PIMCO

August 28, 2019

Global Fetters: Insights From Jackson Hole

While Federal Reserve Chair Jay Powell’s speech at the Jackson Hole Economic Policy Symposium last week didn’t break any new ground other than confirming market pricing for further near-term rate cuts, several academic papers presented at the symposium and Bank of England Governor Mark Carney’s luncheon speech provided deeper insights into global monetary linkages that have become an increasing headache for central bankers both in the U.S. and elsewhere. While a brief blog post won’t do justice to all of these contributions, here are my main takeaways.

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PIMCO

August 21, 2019

Yield Curve Inversion: Markets Are Correct to Price In Higher Recession Risk

On 14 August, the yield spread between two-year and 10-year U.S. Treasury bonds moved below zero for the first time since February 2006. Though it has since widened back to positive territory, the move was significant because such “inversions” of the yield curve – in which short-maturity yields exceed those for longer-maturity bonds – have preceded nearly all recessions dating back to the 1950s. The move has also, understandably, made investors more wary of the economic outlook.

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PIMCO

August 7, 2019

Trade Tension Flare‑Up: Not So Surprising

Any hope for a quiet August in Washington was dashed when President Donald Trump took to Twitter last week announcing he would move forward with imposing 10% tariffs on about $300 billion of Chinese goods on 1 September. This threat comes in addition to the 25% tariffs already imposed on $250 billion of Chinese imports to the U.S.

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PIMCO

July 31, 2019

U.S. Dollar Policy: Through the Looking Glass of U.S. Currency Intervention

President Donald Trump has claimed many times that China has unfairly manipulated its currency. Recently, he lashed out against the European Central Bank (ECB) for hinting at additional monetary policy stimulus because it might drive the euro lower against the dollar. Consequently, investors have become keenly attuned to the possibility of a shift in the strong dollar policy that has been in effect through several U.S. administrations.

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PIMCO

July 3, 2019

Off‑Target: Central Banks and the Mystique of 2%

Central banks around the world are pivoting toward easier monetary policy. In some countries this means rates are falling below previous record lows, and in the U.S. the Federal Reserve has paused a rate-hiking campaign and now appears more likely to lower rates than raise them further.

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PIMCO

June 19, 2019

Oil Sell‑Off Sparks Investment Opportunities

In recent weeks, renewed trade concerns, slowing oil demand, and a notable acceleration in implied U.S. oil production have spurred a material sell-off in oil. Similar concerns caused oil prices to drop at the end of last year, which prompted OPEC+ (i.e., the Organization of the Petroleum Exporting Countries plus 10 additional oil-producing nations) to cut production, reversing policy set earlier in the year of increasing output ahead of a reintroduction of sanctions on Iran.

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PIMCO

June 12, 2019

Interest Rate Outlook: Fed Evaluating Risks to U.S. Economy

As U.S. Federal Reserve officials enter the communications blackout period ahead of the June 18–19 FOMC (Federal Open Market Committee) meeting, bond markets are pricing in a modest chance (roughly 12%) that the Fed will cut interest rates by 25 basis points in June, and a much higher (roughly 88%) chance of a cut by the subsequent meeting in late July (source: Bloomberg as of 10 June 2019).

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PIMCO

May 29, 2019

Key Takeaways From PIMCO’s Secular Outlook: Dealing With Disruption

Our base case for the global economy over the secular three- to five-year horizon sounds relatively benign – at least at first sight. We foresee a continuation of lackluster economic growth on average. We expect low inflation to persist and central banks to keep interest rates at or below New Neutral levels.

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PIMCO

May 15, 2019

The Pivot in U.S.-China Trade Policy May Herald Long Term Tension

In any trade negotiation, the last few innings are usually the most fragile since that is when more difficult issues are addressed, and the U.S.–China negotiations in early May are certainly proof. We had shared in the growing optimism that a deal would be secured given the political appetite on both sides, although we did note the inherent fragility of late-stage negotiations. Even with that caveat, however, the hardline pivot over the week of 6 May and the U.S. decision on 10 May to increase tariff rates on Chinese goods have taken virtually everyone by surprise, including us.

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PIMCO

May 1, 2019

A Tale of Three Cycles

Risk assets have staged a remarkable rebound from the dark days of December, but how long can the rally last? In taking a macro approach to the cyclical outlook for asset markets, I often use this simple framework: There are three main macro factors for markets – the business cycle, the liquidity cycle, and the political cycle. These days, each of these cycles is global. The three interact and influence each other, but each has its own key driver.

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PIMCO

April 24, 2019

Trade Risks That Could Rattle Markets: NAFTA Withdrawal, Auto Tariffs

For decades, President Trump has called the North American Free Trade Agreement (NAFTA) one of the “worst trade deals ever made.” More recently, Trump has threatened to withdraw the U.S. from the original NAFTA if Congress fails to ratify the United States–Mexico–Canada Agreement (USMCA), the trade deal that his administration has negotiated to replace NAFTA. This threat may be more than just a negotiating tactic. Here’s why.

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