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Investing in a Fast‑Moving Cycle
by Tiffany Wilding, Tony Crescenzi, Andrew Balls of PIMCO, 1/12/22

Uncertainty has become an ongoing theme in markets, economies, and communities everywhere, and in this environment, PIMCO investment professionals gathered – virtually, once again – for our recent Cyclical Forum.

Why Yields Fell, and What Happens Next
by Tony Crescenzi of PIMCO, 8/6/21

In our baseline forecast, the recent decline in U.S. Treasury yields will reverse somewhat, as some of the near-term factors pressuring yields lower ebb.

Rising Rates: Not So Fast
by Tony Crescenzi of PIMCO, 10/15/18

Worries about rising U.S. interest rates have gripped global financial markets in recent weeks, with investors questioning whether the era of historically low global interest rates will persist.

Much Ado About … 3%
by Tony Crescenzi of PIMCO, 5/4/18

The 10-year U.S. Treasury yield broke 3% on 24 April to much fanfare. Stock markets tumbled, and with the media blitz that followed, many investors may have started to see “3%” in their dreams.

What’s Next for Investors in the Bond Market
by Tony Crescenzi of PIMCO, 2/21/18

Recent market volatility suggests that investors are questioning whether the post-crisis subpar pace of economic growth, which we dubbed The New Normal, is subsiding, to be replaced by more traditional late-cycle outcomes – in particular faster inflation and tighter monetary policy.

China and the New Global Monetary Order
by Tony Crescenzi of PIMCO, 6/9/16
China’s integration into the world economy began decades ago, but its integration into the global financial system is relatively new.

Federal Reserve Outlook for 2016
by Tony Crescenzi of PIMCO, 1/7/16
Up until the Federal Reserve’s historic December meeting, when the central bank increased its policy rate for the first time since 2006, investors were fixated upon when the Fed might finally move its policy rate up from the range of 0%–0.25%. The Fed set the rate at the zero bound in 2008 to combat a plunge in economic growth and to fight disinflationary pressures tied to the debt deleveraging process.

In 2015, Volatility from a Phantom Rate Hike
by Tony Crescenzi of PIMCO, 9/29/15
Many investors are familiar with the adage, “they don’t ring a bell,” to warn when it is time to get in or out of an investment. Well, sometimes they do, or so the famed scientist Ivan Pavlov would likely contend. The physiologist trained dogs to salivate at the sound of a bell, having conditioned them to associate the bell with the delivery of food. Pavlov discovered that he didn’t actually have to deliver the food to get the canines to salivate in anticipation.

Supply-Side Yellenomics Is (Slowly) Losing Its Grip on Markets
by Tony Crescenzi of PIMCO, 4/9/15
Should investors worry about the possibility that the Federal Reserve might raise interest rates this year? How about the negative economic consequences of the rally in the U.S. dollar? “Hawkish” Fed mistakes?

The Great Escape??
by Tony Crescenzi of PIMCO, 12/5/14
Since the financial crisis, the Fed has engaged both conventional and unconventional tools in a colossal effort to smooth the deleveraging process, help put Americans back to work and boost wage growth. The Fed has achieved two out of three "escapes": 1) Escape from a liquidity trap: Get banks to lend. 2) Escape from quantitative easing: Stop the bond buying program. 3) Escape from the zero bound: Hike the policy rate above zero. Over the longer term, portfolios should be positioned for low policy rates not only in the U.S., but also in Europe and Japan.

Henny Pennies
by Tony Crescenzi, Mike Amey, Tadashi Kakuchi, Ben Emons of PIMCO, 4/28/14
While the Fed?s qualitative guidance may have increased uncertainties over monetary policy, volatility will likely remain contained by powerful short- and long-run forces related to the economic outlook. In the UK, we should at least respect the risk of a hike late in the first quarter of 2015, earlier than what is currently priced in. In Japan, we believe the BOJ will remain full throttle on its current monetary easing for some time.

New Maestro, Seasoned Band
by Tony Crescenzi of PIMCO, 2/5/14
The process by which the Fed carries out its duties is institutionalized, firmly rooted and unlikely to change - no matter who is at the helm. The core personal consumption expenditures (PCE) price index will be one of Janet Yellens most important guiding lights for future Fed policy.

Coal in the Fed's Stock-ing
by Tony Crescenzi, Lupin Rahman, Ben Emons of PIMCO, 12/19/13
Forward guidance has become an increasingly common practice among global central banks. Communicating a possible change in the policy rate could have a large effect on long-term interest rates. Capital has moved literally around the globe as a result of central bank activism in developed countries. Looking ahead, we expect 2014 to be a year of increased differentiation across emerging markets in terms of economic fundamentals, policy reactions and market outcomes.

The New Normalization of Fed Policy
by Tony Crescenzi of PIMCO, 10/4/13
The Fed is sending a message that the unwinding of its extraordinary accommodation will be done with great care and patience, and will take time - a long time. In delaying a taper, not only did the Fed show markets it has little tolerance for any tightening of financial conditions, it also strengthened its forward guidance considerably. The Feds decision to delay a taper will likely relieve some of the upward pressure on longer-term interest rates.

Switcheroo
by Tony Crescenzi of PIMCO, 8/23/13
What is priced into the bond market in terms of its outlook for the Federal Reserve? Does the increase in interest rates sufficiently reflect the markets perceived policy shifts?

Purgatory Is Heaven
by Tony Crescenzi of PIMCO, 8/16/13
Since June, the Fed has stressed three messages: Tapering is not tightening, the federal funds rate will not move in tandem with a slowdown in asset purchases, and any change in Fed policy will rely on data, rather than a date. If Ben Bernanke leaves the Fed when his term expires, whoever is chosen to replace him will be bound by rules and the strength of the institution. The outlook for interest rates depends more on the Feds overall approach to the policy rate, and PIMCO believes the Fed will not increase that rate until 2016.

Calm Has Replaced Fear in the Bond Market
by Tony Crescenzi of PIMCO, 7/31/13
Calm largely returned to the bond market in July following a bout of turbulence in June. Volatility declined across the broad spectrum of fixed income assets, with interest rates and credit spreads falling from their highs, in some cases dramatically. Flows have also turned positive in many market segments, particularly for high yield and bank loan securities.

Into the Woods
by Tony Crescenzi, Tadashi Kakuchi, Ben Emons of PIMCO, 5/31/13
Excess liquidity, falling net issuance and higher correlations among assets complicate the eventual exit that the Federal Reserve and other central banks must make from their extraordinary policies. The Bank of Japans ideology has completely changed to tackling deflation from tolerating deflation. The key focus in the coming months will be how private sectors react. Investors who depend chiefly upon central bank activism may put themselves at risk. They may need to hedge volatility by ensuring their investments are built more on solid fundamentals and reasona

Telling (Taper) Time
by Tony Crescenzi of PIMCO, 4/11/13
Investors need be alert for signs of progress in the many employment indicators the Fed is watching, and listen closely to what the Fed is saying to know when bond buying will be tapered. The failure to achieve escape velocity is why the Fed is using its printing press to purchase $85 billion of securities monthly. These purchases will continue, the Fed says until the outlook for the labor market has improved substantially. The Fed has made progress toward achieving escape velocity but the progress must be sustained for the Fed to throttle back on its stimulus.

Ten Acts for Chairman Bernanke in January 2013
by Tony Crescenzi of PIMCO, 1/9/13
Federal Reserve Chairman Ben Bernankes term ends in January 2014, and it is unclear whether he will stay on for another. We expect Bernanke will muster every means he can over the next year to help the U.S. and indeed the world emerge from a gloomy time.Here, then, are 10 items we suggest for Ben Bernankes to-do list in 2013.

Deja Vu All Over Again
by Tony Crescenzi, Andrew Bosomworth, Lupin Rahman, Ben Emons of PIMCO, 11/26/12
If the eurozone is to endure, it will require reduced economic differences among countries and larger common fiscal capacity. Emerging market central banks are likely to remain in wait-and-see mode while looking to the U.S. for clarity on the fiscal negotiations and domestic macro prints for signs of moderation in both inflation and activity. While central banks in advanced economies have not traditionally used explicit policies to target exchange rates, the European debt crisis may change all that.

Pottersville
by Tony Crescenzi of PIMCO, 10/2/12
The excessive use of debt fueled by money printing was the pathway to the global debt crisis. Fed Chairman Ben Bernanke, an expert on the Great Depression, understands the ravages of debt deflation and his every action has been to prevent it from occurring. Greater care must be taken in the future to ensure that our fiat based, fractional reserve system does not run amok. This is why regulators are demanding that banks raise capital, reduce their proprietary trading activities, and shift their business models closer to a utility-style model.

The Longest Yard
by Tony Crescenzi, Ben Emons, Andrew Bosomworth, Isaac Meng of PIMCO, 7/30/12
As the global slowdown progresses, we can expect central banks to deploy more policy tools without limits to stem the pace of deleveraging. In Europe, quantitative easing using ESM bonds could prove to be another bridge that buys politicians more time, but does not solve the root problem. We expect real economic growth in China to be muted. While some stabilization is possible later this year, it is hard to foresee a sustained recovery.

The Purveyors of Notgeld
by Tony Crescenzi of PIMCO, 6/8/12
It is through this emergency money and repressively low interest rates that the worlds central banks create conditions that compel investors to seek out value in real assets and move outward along the risk spectrum. Investors should focus on assets that are likely to benefit from central bank policies designed to reflate deflated economies: commodities, land, equipment and software, for example. In equities, this means favoring entities in the developing world over those of the developed world in particular those reliably expected to pay a dividend.

Watchful Waiting
by Tony Crescenzi, Ben Emons, Andrew Bosomworth and Lupin Rahman of PIMCO, 5/4/12
Today, the Federal Reserve itself faces an unusually uncertain period because it lacks a complete understanding of the potential side effects of its unconventional policy actions; in particular the elongated timeline of its zero interest rate policy and its massive money printing. What matters in shaping market expectations about inflation and deflation are the credibility of fiscal policy, the prospect for real economic growth and the central banks commitment to step back from the punch bowl.

To QE or Not to QE
by Tony Crescenzi of PIMCO, 3/29/12
If the Fed does nothing, asset prices could fall, threatening Americas fragile economic recovery. But if the Fed decides to battle the forces of deleveraging, it could commit a classic error by acting during a turning point and thereby doing too much. During Operation Twist, the Fed will absorb the equivalent of all of the issuance of U.S. Treasury securities maturing beyond seven years. When Operation Twist ends, global investors will be left to shoulder the burden.

To Fight or Not to Fight the Worlds Central Banks
by Tony Crescenzi, Ben Emons, Andrew Bosomworth, Lupin Rahman and Isaac Meng of PIMCO, 1/31/12
We are skeptical that fiscal austerity alone is sufficient for all eurozone countries to grow and remain solvent. We thus expect the ECB to continue supporting the euro area with liquidity in 2012. Recent central bank policy in China is oriented toward stabilizing growth in a political succession year, while balancing lingering inflation and medium-term systemic risks. Investors may want to hedge portfolios by looking to select emerging markets with the ability and willingness to cut policy rates both from a cyclical as well as structural perspective.

Hot Potato
by Tony Crescenzi, Ben Emons, Andrew Bosomworth, Lupin Rahman and Rob Mead of PIMCO, 12/21/11
The world is playing a game of hot potato with European financial assets, and the European Central Bank is a reluctant player. Together, Europes fiscal and monetary authorities can likely avert a systemic accident, but they must act quickly and courageously. Differentiation among emerging market monetary policies is increasing. And in Australia, the central bank will likely need to ease further in 2012. If every central bank enacts similar monetary policy tools, those tools compete for the same targets (financial and inflation stability), thereby potentially eroding their effectiveness.

Ben Bernanke: The Decider
by Tony Crescenzi of PIMCO, 11/16/11
Amid great economic stress, policymakers have missed many opportunities to improve the situation and better the lives of people. The leadership void in the U.S. was illustrated by the dismal display of policy dysfunction that led the country to lose its AAA credit rating. European leaders have fared no better. Ben Bernanke and the Fed, however, have demonstrated leadership. What is both remarkable and instructive for the outlook for monetary policy is how active the Fed remains even though it has reached the zero-bound for interest rates.

Ya Gotta Believe!
by Tony Crescenzi, Ben Emons, Andrew Bosomworth, Lupin Rahman and Isaac Meng of PIMCO, 9/20/11
Central banks around the world consider easing monetary policy amid concerns of a global economic slowdown. At least one major central bank, however, appears to be taking an opposite stance: China. Policymakers there are concerned about inflation, excessive credit and property speculation. In other emerging nations, central bankers are generally poised to ease, but have less ammunition than they did after Lehman collapsed.

Saying No to Keynes and Fiscal Folly
by Tony Crescenzi, Ben Emons and Lupin Rahman of PIMCO, 8/11/11
?Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits. The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics: for government to increase spending when private sector aggregate demand weakens and stymies job growth. The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

Saying No to Keynes and Fiscal Folly
by Tony Crescenzi, Ben Emons and Lupin Rahman of PIMCO, 8/11/11
?Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits. The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics: for government to increase spending when private sector aggregate demand weakens and stymies job growth. The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

The End of QEII: It?s Time to Make the Donuts
by Tony Crescenzi, Ben Emons, Andrew Bosomworth and Lupin Rahman of PIMCO, 4/26/11
With quantitative easing the Federal Reserve has in essence picked the pockets of Treasury bond investors throughout the world. Ultimately, the U.S. must own up to its past sins and let the deleveraging process play itself out. The U.S. must invest in its people, its land, and its infrastructure, as well as promote free trade, to achieve economic growth rates fast enough to justify consumption levels previously supported by debt.
33 results found.