Economic and Market Commentary

Macro at PIMCO: Beyond Duration Calls

6/25/2024

Daniel J. Ivascyn, Richard Clarida

PIMCO leverages its deep understanding of macroeconomics, policy, and industry nuance to construct portfolios primed to uncover opportunity and manage risks.

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Text on screen: DANIEL J. IVASCYN, Group Chief Investment Officer

DAN: I think sometimes we get put into a pretty narrow box. Well, PIMCO does macro, it means that the bulk of their return is going to be coming from a duration call or some other big macro theme.

And sure, from time to time we'll have a tactical duration call, but that's not what macro means. Macro means a detailed understanding of how the global economy interacts. A detailed sense of how risk is going to interact across portfolios under different macro environments. A lot of complexity and nuance between similarities and differences across regional economies around the globe and how that evolves over time. It's not just a duration call.

Text on screen: Richard Clarida, Global Economic Advisor

RICH: And probably we're seeing more of that in the current US macro environment than we've seen in a very long time. Not just what is the top line budget deficit number, but which industries are getting the subsidies, which industries are going to be impacted by Basel three. Here at PIMCO where we have a strength in that we not only focus on the macro, we focus on the policy details as well.

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Disclosure

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.

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. Outlook and strategies are subject to change without notice.

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