Putting Markets in Perspective


Our latest thinking on global economic drivers and financial markets.

Economy

PIMCO’s outlook for major economies over the next six to twelve months

  • Global

    Outlook

    Global growth should continue, with world GDP growth in the 2.75%–3.25% range.

    Implications

    Adopt a more defensive approach to investing, focusing on capital preservation and diversified sources of alpha.

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  • U.S.

    Outlook

    U.S. economic expansion should continue, but inflation challenges linger.

    Implications

    Consider an active allocation to U.S. Treasuries which have been historically less volatile in downside events.

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  • Europe

    Outlook

    Uncertainty about how the ECB will remove accommodation is a risk to the otherwise positive growth outlook for Europe.

    Implications

    Take a cautious approach to interest rate exposure in the eurozone and emphasize liquidity and bottom-up research.

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  • Emerging Markets

    Outlook

    EM economies are progressing through the early stages of a recovery and we expect growth to continue.

    Implications

    Keeping in mind the potential for short-term volatility, now may be a time to consider adding diversified EM allocations to portfolios.

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Financial Markets

PIMCO’s outlook for three key financial markets with implications for investors

  • Fixed Income

    Outlook

    Little slack in the economy and tight valuations mean bonds may be particularly valuable in today’s environment.

    Implications

    With rising uncertainty, an allocation to bonds may help cushion portfolios when volatility rises.

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  • Equities

    Outlook

    Factor investing may be a solution for investors seeking higher returns.

    Implications

    Focus on factors that are cheaper today and therefore have the potential for excess returns in the future.

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  • Currencies

    Outlook

    We don’t see significant imbalances in G-10 currency markets.

    Implications

    Consider avoiding currency exposure through hedged strategies.

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  • Mortgages

    Outlook

    Mortgage-related securities continue to be an area where we see value.

    Implications

    Consider reducing corporate credit risk in favor of higher quality securitized assets, such as agency and non-agency mortgage backed securities.

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