9 January 2024
PIMCO, a leading U.S. bond manager, has issued a warning against early optimism over conquering inflation and recession. Despite market hopes for a smooth economic trajectory, PIMCO advises caution, emphasizing the continued risk of recession. They predict bonds may outshine stocks in 2024 if a recession hits, offering a safeguard against potential inflation spikes. However, they remain neutral on duration, a key metric for interest rate sensitivity, following a recent bond rally driven by expectations of Federal Reserve rate cuts. This cautious stance comes as U.S. Treasury yields have significantly dropped in recent months.