Outlook 2025: Gordon Harding (Pimco)
By Gordon Harding, Fixed Income Product Strategist, Pimco
‘The world is currently experiencing significant geopolitical uncertainty, with the US at the center of this turbulence. The Trump administration’s aggressive measures to address trade deficits and reduce the size of the government have increased policy volatility, heightening global uncertainty, especially for export-dependent economies. This environment threatens the US’s recent economic and financial market exceptionalism as both business and consumer confidence decline.
Protectionist US policies and potential government spending cuts have raised concerns about recession risks and inflation in the US. Meanwhile, prospects for increased fiscal spending are improving outlooks for countries like Germany and China. Major central banks are expected to continue easing policies toward neutral levels.
This US-led uncertainty has triggered a sell-off in risk assets and increased market volatility. Conversely, high-quality bonds have performed well, delivering returns comparable to equities over the past year, and currently offering attractive valuations.
In this turbulent environment, it is advisable to seek stable sources of return. Attractive bond yields suggest bonds are well-positioned, making it a potentially good time to look at global opportunities. Investing across global fixed income markets in highquality, diversified bonds can potentially enhance portfolio resilience. Additionally, allocating to global investment grade credit or securitized assets, such as governmentguaranteed agency MBS, can potentially strengthen a portfolio. In private markets, asset-based finance is preferred over corporate credit for its relative stability and risk profile.
It is advisable to seek stable sources of return.
