From Quiver Quantitative:

Pimco, managing $1.7 trillion in assets, predicts bonds can yield equity-like returns in next 6-12 months despite recent decline in yields and recommends diversified fixed income strategies. Pimco forecasts a US economic slowdown, though they warn against long-term money market funds and suggest Treasury inflation-protected securities and high-quality backed assets for investors. Pimco stresses the risks of an inflation resurgence and a need for a yield-curve steepening strategy. Lastly, Pimco identifies non-US bond markets as potential outperformers.

Investors can expect a shift towards economic stagnation or mild contraction. The US is anticipated to perform relatively well compared to the UK, Australia, and euro-zone.

Pimco’s assessment concludes that bonds have the potential to mirror equity-like returns. This outlook holds particularly if the economy skids into a recession, positioning bonds to outshine stocks. Furthermore, should inflation make a comeback, the starting high yields act as a buffer for bond investments. Pimco expects a Federal Reserve interest rate decrease approaching or exceeding pre-2020 levels.



Read more: Pimco’s Strategy for Maximizing Returns