Text on screen: PIMCO
Text on screen: Chad Van Dyk, Account Manager
Chad Van Dyk: Hi, I'm Chad Van Dyk, an account manager with PIMCO's global wealth management team.
Text on screen: PIMCO EDUCATION, MACRO & MARKETS
And welcome to our presentation of PIMCO's Macro and Markets,
FULL PAGE GRAPHIC: TITLE – Cyclical Outlook. Subtitle: PIMCO’s process helps determine the most likely road ahead. The column on the left is titled Three economic themes in 2023 with three bullets: the first bullet reads, Inflation likely to moderate; the second bullet reads, Central banks close to holding at restrictive rates; and the third bullet reads, Shallow recession but not without pain. The column on the right is titled Investment Implications, with three bullets: The first bullet reads Bonds are back; the second bullet reads, Build a resilient portfolio; and the third bullet reads, Opportunities in active management.
a conversation we have each quarter with our clients to help contextualize the fixed income market, share insights from PIMCO's cyclical forum, and more. I've been with PIMCO for almost 15 years now.
(Back to Chad)
And like you, we've certainly seen an evolving market landscape in that time.
2023 is no different. So today we'll be talking about the current environment. We'll focus on how strained markets have led to a strong case for bonds. We'll discuss what's changed in the past year, how short term bonds or even bonds in general can provide attractive yield pickup while cash yields lag, and we'll also review PIMCO's thoughts on inflation given a year of coordinated central bank tightening globally.
Text on screen: To earn continuing education (CE), simply click the link below, watch the program, and complete a short quiz. This presentation is approved for CFP, IWI, and CPA and may be accepted more broadly.
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 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. 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. Income from municipal bonds is exempt from federal income tax and may be subject to state and local taxes and at times the alternative minimum tax; a strategy concentrating in a single or limited number of states is subject to greater risk of adverse economic conditions and regulatory changes.. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor, there is no assurance that the guarantor will meet its obligations. References to Agency and non-agency mortgage-backed securities refer to mortgages issued in the United States. U.S. agency mortgage-backed securities issued by Ginnie Mae (GNMA) are backed by the full faith and credit of the United States government. Securities issued by Freddie Mac (FHLMC) and Fannie Mae (FNMA) provide an agency guarantee of timely repayment of principal and interest but are not backed by the full faith and credit of the U.S. government. 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. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. 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. 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
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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 material contains the current 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. 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 LLC. in the United States and throughout the world. © 2023, PIMCO.
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