Value emerging in bonds, but focus on high-quality issues, says Pimco

THE near-term litany of macroeconomic woes has yet to lift – stickier inflation, higher interest rates, geopolitical pressures. But the good news is that any recession is expected to be “shallow”, while value is emerging in fixed income markets, says Pimco group chief investment officer Dan Ivascyn.

The key, says Ivascyn, is to take an active stance in portfolios, invest in “high-quality” companies, and be patient.

“Our advice – and our philosophy – is that investors should focus on longer-term value and be a bit more patient. Fixed income yields are increasingly attractive from a historical perspective. There continues to be inflation uncertainty, but your base case is that inflation will begin to trend lower. US inflation may settle at around 4 per cent, compared to 8.2 per cent as at September.