Bond fund giant Pimco warns of ‘hard landing’ for UK economy
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The UK is at high risk of a serious economic downturn next year, one of the world’s biggest active bond fund managers has warned.
Daniel Ivascyn, chief investment officer at Pimco, told the Financial Times that he has been running larger than usual bets on UK
The broad consensus now among investors is that the Fed will manage to deliver a soft landing — bringing inflation down to target without cracking the economy. Risky assets such as stocks, which perform well when the economy is humming and when interest rates are lower, have surged as US investors bet that the Fed will cut rates early in 2024.
Ivascyn said he did not expect a US recession next year, but added that he saw a greater risk of an economic slowdown than most traders are pricing in. The divergence between the US and other big markets presents an interesting investment opportunity, he said.
“Global bond investing was dead for a long period of time because yields were negative in the UK, Europe and Japan,” he added. “But global bond investing is back. It’s the first time in a long time we’ve been excited about value and relative value in the UK, Europe and Japan.”
