PIMCO sees bond opportunities amid geopolitical market rupture

InvestorDaily

PIMCO has warned that accelerating geopolitical fragmentation, mounting fiscal pressures and a global artificial intelligence investment boom are creating a more uncertain economic environment, while strengthening the case for high-quality fixed income over the next five years. In its latest Secular Outlook, titled Rupture and Resilience, the global fixed income manager said the world was moving away from a predictable era of globalisation and towards a period characterised by greater dispersion in economic outcomes, inflation and investment returns. The report argued that politics, geopolitics and economic security policies have become direct drivers of growth and inflation, increasing differences between countries, sectors and companies rather than simply creating short-term market volatility.

PIMCO said fragmentation of trade, security and financial alliances identified in its previous outlook had accelerated, creating a wider range of potential economic scenarios. “The global economic trajectory has shifted from a narrow range of plausible outcomes to an uncertain and wide distribution of possible scenarios,” the report said. Although fiscal pressures are rising across major economies, PIMCO said it did not expect a sudden US fiscal crisis, instead anticipating periods of market volatility as investors periodically reassess debt sustainability and government credibility.

The rest of this article can be found at investordaily.com.au.