Leaving PIMCO.com

You are now leaving the PIMCO website.

Skip to Main Content
Economic and Market Commentary

Assessing Risks, Uncovering Global Opportunities

Given prevailing economic pressures worldwide, we think selectivity remains paramount to identifying attractive investments. Watch Group CIO Dan Ivascyn and Economist Tiffany Wilding discuss opportunities and challenges in global markets.

Text on screen: PIMCO

Footer Overlay: PIMCO provides services only to qualified institutions, financial intermediaries and institutional investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.

Text on screen: Ken Chambers, Product Strategist

Chambers: Thinking about the global opportunity set and really outside of the U.S. and maybe the developed markets in the U.K. and Europe, opportunities, vulnerabilities, what are you and the team seeing there?

Wilding: So China has been one of the biggest surprises, I think, since our last cyclical forum in March. Growth has obviously surprised to the downside as a result of their zero-COVID policies, as a result of their kind of stop-start strategy for stimulus, and then obviously their housing market, which has also been somewhat of a policy choice to engineer some deceleration there.

Text on screen: Although China may experience low growth, we don’t expect a recession

Images on screen: Chinese city skylines, Shenzen Stock Exchange

So overall we think that there could be some more willingness from Chinese policymakers to tolerate some lower growth outcomes, but ultimately we aren't expecting a recession in China. But nevertheless we do expect there to be downside risks there. And that, plus higher policy rates in developed markets and commodity markets doing what they're doing, obviously could be some challenges for broader emerging markets.

Text on screen: Inflation hasn’t been as sticky in Japan as other developed markets

Images on screen: Tokyo skyline, Tokyo Stock Exchange

Japan has been kind of the one economy for developed markets that hasn't really seen the type of more sticky inflationary pressures that other developed markets have. And I think that's raised a lot of questions around Japan in the sense of will they eventually see it, and is just there longer lags to that economy. I think that's really uncertain.

Nevertheless, I think this environment does raise the risk that they can actually can generate some inflationary pressures like the rest of DM, in which case you would have to see that policy adjustment coming out of the Bank of Japan. So I think still a lot of uncertainty around that economy as well.

Chambers: Tiffany, thank you, Dan, turning to you to walk through some of the investment implications.

Ivascyn: Sure. So to start,

Text on screen: Given global economic uncertainty, it makes sense to be more liquid and defensive

Images on screen: PIMCO trade floor

Given significant global economic uncertainty, geopolitical risks, we think it makes sense to be more liquid and more defensive. With that said, we are seeing some interesting opportunities.

Text on screen: Daniel J. Ivascyn, Group Chief Investment Officer

Within the emerging market area of the opportunity set, more cautious on China, more cautious about Chinese credit. China doesn't have the same type of inflationary pressures. So yields in their bond markets look less interesting to us.

But other areas of the emerging market opportunity set for some of the higher-risk strategies do look interesting. Central banks across the emerging market world have been more aggressive than developed market central banks.

Images on screen: Rio de Janeiro, Brasilia

You're seeing some turning of inflation at a more aggressive pace, Brazil as an example, where central banks have been very, very active early on.

Then when it comes to the U.S. dollar, almost universal acknowledgement within the firm that the dollar looks quite expensive from a longer-term valuation perspective, but also a hesitancy to be too aggressive in reflecting a negative dollar view at this point in time.

There's tremendous absolute relative momentum to the U.S. economy.

Images on screen: The Federal Reserve

You have a central bank now that is tightening very, very aggressively and lot of other uncertainty that could lead to a flight-to-quality dynamic that supports the U.S. dollar.

So existing firm-wide positioning is a slight tilt to non-dollar currencies but sized at a very, very small level relative to the amount of risk we could take in theory, given that we expect there to be better overall entry points.

So there are going to be some targeted opportunities in terms of some of the higher-quality, local, interest rate markets. There'll likely be some opportunities in some of the higher-quality credits as well, as a source of diversification versus more traditional credit in the U.S. and in Europe.

Text on screen: For more insights and information, visit pimco.com

Text on screen: PIMCO


Past performance is not a guarantee or a reliable indicator of future results.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, call risk, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Diversification does not ensure against loss.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. Outlook and strategies are subject to change without notice.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. | Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the United States Securities and Exchange Commission. | PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. | PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Irish Branch (Company No. 909462), PIMCO Europe GmbH UK Branch (Company No. 2604517) and PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 15 of the German Securities Institutions Act (WpIG). The Italian Branch, Irish Branch, UK Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority; and (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH- The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser. | PIMCO Asia Pte Ltd (Registration No. 199804652K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services licence and an exempt financial adviser. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Asia Limited is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance. PIMCO Asia Limited is registered as a cross-border discretionary investment manager with the Financial Supervisory Commission of Korea (Registration No. 08-02-307). The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Investment Management (Shanghai) Limited Unit 3638-39, Phase II Shanghai IFC, 8 Century Avenue, Pilot Free Trade Zone, Shanghai, 200120, China (Unified social credit code: 91310115MA1K41MU72) is registered with Asset Management Association of China as Private Fund Manager (Registration No. P1071502, Type: Other) | PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862. This publication has been prepared without taking into account the objectives, financial situation or needs of investors. Before making an investment decision, investors should obtain professional advice and consider whether the information contained herein is appropriate having regard to their objectives, financial situation and needs. | PIMCO Japan Ltd, Financial Instruments Business Registration Number is Director of Kanto Local Finance Bureau (Financial Instruments Firm) No. 382. PIMCO Japan Ltd is a member of Japan Investment Advisers Association, The Investment Trusts Association, Japan and Type II Financial Instruments Firms Association. All investments contain risk. There is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; the investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of each type of fee and expense and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balance of assets and thus such fees and expenses cannot be set forth herein. | PIMCO Taiwan Limited is managed and operated independently. The reference number of business license of the company approved by the competent authority is (110) Jin Guan Tou Gu Xin Zi No. 020. 40F., No.68, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.). Tel: +886 2 8729-5500. | PIMCO Canada Corp. (199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L 1G2) services and products may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose. | PIMCO Latin America Av. Brigadeiro Faria Lima 3477, Torre A, 5° andar São Paulo, Brazil 04538-133. | No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2022, PIMCO.


Featured Participants

Tell us a little about you to help us personalize the site to your needs.

Terms and Conditions

Please read and acknowledge the following terms and conditions:
{{!-- Populated by JSON --}}
Select Your Location


  • The flag of Canada Canada

Europe, Middle East & Africa