Key topics

PIMCO's outlook

Implications

Global economy

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

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

U.S. economy

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

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

European economy

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

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

EM economies

EM fundamentals have improved but individual country characteristics remain differentiated.

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

Disclosures

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk and liquidity risk. The value of most bonds and bond strategies is 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 the current low interest rate environment increases this risk. Current 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. Commodities contain heightened risk, including market, political, regulatory and natural conditions, and may not be suitable for all investors.  Equities may decline in value due to both real and perceived general market, economic and industry conditions. 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. High yield, lower-rated securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Inflation-linked bonds (ILBs) issued by a government are fixed income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. Management risk is the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results, and that certain policies or developments may affect the investment techniques available to PIMCO in connection with managing the strategy. Derivatives may involve certain costs and risks, such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested.


Statements concerning financial market trends 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 suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market.   Investors should consult their investment professional prior to making an investment decision.


This material has been distributed for informational purposes only.  Forecasts, estimates and certain information contained herein are based upon proprietary research 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. No part of this material 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. ©2017, PIMCO.

CMR2017-0118-243671