Tags: pimco | foreign | bonds

Pimco Recommends Foreign, Short-Term Bonds

Tuesday, 09 Jun 2009 01:30 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

Money management firm Pimco recommends foreign and short-term bonds, as huge monetary and fiscal stimulus raise the threat of inflation.

Those views are part of the bond giant’s secular outlook, which covers the next three to five years.

Deflation represents the main risk in the short term and then inflation in the long term, the outlook says.

The deflation concern stems from “the severity of the collapse in global demand and the resulting large gap in actual versus potential output,” the report states.

“Inflation risks will come to the fore later … as potential output becomes more constrained … and policymakers struggle to withdraw the massive levels of monetary and fiscal stimulus that have recently been introduced.”

The case for foreign bonds: “U.S. bonds, especially Treasuries, will face greater sovereign risk, as the U.S. debt burden mounts and inflation expectations start to rise later [on],” the report states.

As for short-term bonds, their yields “are likely to be anchored near current low levels for a longer period than what is now priced into forward interest rate curves,” the study says.

“Policy makers in many countries are likely to overstay with loose monetary policy.”

The report also warns that the dollar may fall.

Others share PIMCO’s concerns.

San Francisco Federal Reserve Bank President Janet Yellen said in a speech that policymakers must be ready for “substantial shocks” and that rising Treasury yields constitute a “disconcerting” signal of inflation fears, Bloomberg reports.

© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved