Pimco, a leading global asset manager with $2 trillion in assets under management, has been advising investors to position themselves for potential “vigilantism” in the bond market due to a growing U.S. debt load.
According to Pimco, taking U.S. equity exposure and shifting to more debt exposure in Europe may be sensible strategies. The firm’s decision to cut its allocation to longer-duration Treasurys is based on several factors, including:
* Inflation, economic growth, and government policies that can pressure longer-duration yields higher.
* Increased Treasury issuance to fund the U.S. deficit.
By shifting their focus to European debt markets, investors may be able to better navigate potential risks associated with a worsening U.S. deficit backdrop. However, it is essential for investors to conduct thorough research and consider their individual risk tolerance before making any investment decisions.
Source: https://www.marketwatch.com/story/how-investors-can-position-for-bond-vigilantism-and-a-growing-u-s-debt-load-according-to-pimco-fa02e07c