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

    Continued global economic expansion, with world GDP growing 2.5%–3.0% in 2017.

    Implications

    Adopt a cautious approach, prioritizing capital preservation and liquidity to take advantage of market dislocations.

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  • U.S.

    Outlook

    Markets expect higher inflation and higher interest rates in 2017, converging with PIMCO’s view.

    Implications

    With the potential for higher rates, manage interest rate risk and keep a multi-sector approach.

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  • Europe

    Outlook

    Eurozone growth should remain sluggish in the 1.0%–1.5% range, despite continued ECB support.

    Implications

    Keep a cautious approach towards European assets until the economy finds a stronger footing.

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  • Emerging Markets

    Outlook

    EM fundamentals have improved but individual country characteristics remain differentiated.

    Implications

    Favor managers who can discern value in this highly differentiated space.

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Financial Markets

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

  • Fixed Income

    Outlook

    Bouts of market volatility may create opportunities to add alpha in fixed income.

    Implications

    Consider the range of opportunities in the fixed income space and take a multi-sector approach.

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  • Equities

    Outlook

    Value stocks may be poised for further outperformance as the economy strengthens.

    Implications

    Consider emphasizing value-oriented strategies within equity allocations.

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  • Mortgages

    Outlook

    Expect national home prices to increase by 4.0% to 8.0% over the next two years.

    Implications

    Consider non-agency MBS as this sector should benefit from the upward trajectory in housing.

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  • Real Assets

    Outlook

    U.S. inflation should hover in the 2.0%–2.5% range in 2017, with risks to the upside.

    Implications

    Consider TIPS and commodity allocations to help insulate portfolio from inflation’s erosive effects.

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