Mark Kiesel, CIO Global Credit, explains why the US economic recovery is good for corporate credit and where PIMCO sees select opportunities.
PIMCO believes that corporate credit markets have priced in a sharper path of Fed tightening than the one we expect – making now an attractive time to invest.
- PIMCO continues to anticipate a gradually rising interest rate environment – one in which policy makers are very cautious.
- Given the current level of yields across the global credit markets, we think markets have priced in a different path for rates – one that is higher, or perhaps reflects the risk of a policy mistake or dislocation.
- Taking these factors into account, we expect the yields from corporate credits to more than compensate for future rises in interest rates.