Halister News

(Bloomberg) -- Pimco favors U.S. credit and peripheral euro-area government bonds, while having low conviction in G-10 currencies, portfolio manager Nicola Mai says in phone interview.

• Favors U.S. IG credit and it’s cautiously long on HY
• Also likes U.S. non-agency mortgage and inflation-linked bonds
• Firm is “selectively” long on some EM currencies, including BRL, MXN, RUB
  • Remains short CNY as a more gradual devaluation is probably coming
• Says Fed, BOJ meetings don’t really change the portfolio positioning
  • BOJ recognized that its monetary policy is reaching an “exhaustion point” and there is a risk that JPY may strengthen from here
• Fed’s message “mixed” and it was not “a game changer”
• Pimco approached the meetings with neutral positioning on USD, JPY and doesn’t have high conviction in major currencies
• Stance remains “neutral to underweight” on duration, globally; bunds not attractive, especially in long end
• Likes BTPs, Bonos; while euro-zone politics remain a source of market risk over the medium term, sees “decent economic momentum” and ECB anchoring the system in near term
  • Still favors Spain over Italy given the latter’s mounting political uncertainty ahead of the Constitutional referendum due later this year; Spain has better fundamentals
• The political events over the next 12 months may generate noise; still doesn’t see any of them leading to an election of a populist government in the near term
• NOTE: Read more on credit as preferred asset class here: From Pimco to Janus, Credit Rewards Trounce Bubble Risk