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The Role of Bonds in a New Era of Low Yields
Monetary Policy Framework: The Fed Says What, But Needs Help on How
While the Fed announcement came earlier than anticipated, the conclusions were in line with the evolutionary, not revolutionary, changes to the Fed’s framework we have long been expecting.
Gold Still Shines Bright
A Slow and Uneven Recovery Still Likely Despite July’s U.S. Price Bounce
Overall, July’s CPI rebound is encouraging, as it now appears CPI inflation could end 2020 closer to 1.5% y/y.
Fed Reinforces Commitment to Ongoing Monetary Policy Support
As expected, the Federal Open Market Committee (FOMC) did not announce a major shift in monetary policy following the July meeting.
June CPI Report Underscores Economic Fragilities
Consumer prices were firmer than widely expected in June, but underlying softness in the report was a stark reminder that the U.S. economy remains fragile and that more stimulus will likely be necessary to support the recovery.
Asset Allocation Takeaways: Building Resiliency Amid Uncertainty
The challenge facing investors is how to construct portfolios in an environment where asset prices appear disconnected from the real economy and the resolution of the health crisis is murky.
Public‑Private Solutions to Safeguard Economies Everywhere
Public-private partnerships and solutions that bring the rather arcane world of “development finance” into mainstream investment practice could be an important, and beneficial, development to come out of this extraordinarily difficult period.
Cyclicals 2.0: Green and Digital
While unique and specific to each country or region, the policy moves seen around much of the world have an unusual amount of commonality with substantial support recurring around two broad themes: green and digital
The Long Climb
Rather than looking back at the vertiginous drop in economic activity that ended the record 128-month economic expansion in February, we discussed the likely nature and shape of the nascent recovery.
In Search of Credit Quality – Q&A
In this Q&A, portfolio managers Eve Tournier and Sonali Pier share their interpretation of recent market moves, and their views on what parts of the market investors should pay attention to – and which to avoid.
Six Key Questions on U.S. Policy and the Economic Outlook
Looking ahead to the U.S. economy gradually reopening as policymakers inject record stimulus – all of this in an election year – Libby Cantrill, PIMCO’s head of public policy, and Tiffany Wilding, North America economist, assess the key questions and risks.
Post‑COVID Economy: Not the Way We Were
Europe: Moment of Truth
One major airline announced that it may need to lay off around one-third of its staff, and reports suggest three-quarters of U.K. restaurant and bar operators risk going bankrupt. In Italy and Spain, tourism represents around 12% and 14% of respective GDP, according to the World Travel and Tourism Council, and it’s hard to see these activities coming back anytime soon.
Looking Beyond Market Stabilization to the Future Path of Monetary Policy
Over the coming months, we think the Fed’s focus will shift from one of crisis management to one of keeping financial conditions easy.
Proposal for State Bankruptcies Unlikely to Succeed
In a radio interview on 22 April, Senate Majority Leader Mitch McConnell said he would be in favor of states being allowed to declare bankruptcy as opposed to the federal government providing additional assistance. His comment came as legislators spar over future federal support for state and local governments.
Post-Pandemic Interest Rates: Lower for Longer
Anti-Crisis Euro Package: Not Good Enough
At face value, the €540 billion (bn) package announced by euro area finance ministers last week sounds impressive. But details suggest it is insufficient and leaves the burden of crisis management in the hands of national governments and the European Central Bank (ECB).
Finding the Right Level of Support for Capital Markets and Mortgage Rates
The U.S. Federal Reserve has taken extraordinary steps to facilitate liquidity in capital markets. While these actions have begun to stabilize and normalize valuations, in the lowest risk “core” of the fixed income markets – trading of Treasuries and agency mortgage-backed securities (MBS) – issues still remain with risk transfer and liquidity.
From Hurting to Healing
Economic Fallout: Here Comes Congress!
The massive U.S. stimulus bill that President Trump signed last week is designed to help individuals and businesses facing disruption caused by the coronavirus. However, Congress may have to do more in the months ahead.
In Europe the Crisis Policy Response Is Substantial, But More Is Likely Needed
Over the past few weeks, European countries have stepped up virus containment measures aggressively, with most of the region now in lockdown. Gauging the exact economic impact of these measures is hard.
Policymakers: Pulling Out All The Stops
In the face of the most serious global health crisis in more than a century, fiscal and monetary policymakers around the world will very likely have to pull out all the stops in an effort to prevent what currently looks like an inevitable recession from turning into a depression, and to stop financial markets from shifting from a drawdown into a meltdown.
Economic Outlook Update: ILU Trajectories
The spread of COVID 19, volatile financial markets, new historical lows for U.S. bond yields, and a rare intermeeting rate cut by the Federal Reserve made for a highly unusual backdrop for PIMCO’s quarterly Cyclical Forum in early March.
When Rate Cuts and Quantitative Easing Fall Flat
The plunge in the 10-year U.S. Treasury yields over the last week reflects the growing anticipation that the Fed and other central banks will cut rates and use other policy tools, including quantitative easing, to keep financial conditions from tightening during this period of volatility.
Fed Moves First to Counter COVID 19 Market Fears
the Federal Reserve surprised markets with an emergency interest rate cut of 50 basis points (bps). The Fed’s move is likely the first in a series of synchronized actions by the G-7 aiming to support developed market economies as the coronavirus continues to spread outside of China.
Asset Allocation Views: Prolonging the Expansion
Following a bumpy 2019 for global growth, we see economic momentum recovering in 2020. While the global health crisis adds uncertainty to the economic outlook, we believe the economic and market risks will be temporary.