(Bloomberg) — Pacific Investment Management Co. Chief Investment Officer Daniel Ivascyn is preparing for a “harder landing” than other investors as central bank chiefs prepare to continue raising interest rates, he said in an interview with the Financial Times.
“The more tightening that people feel motivated to do, the more uncertainty around these lags and the greater risk to more extreme economic outlooks,” Ivascyn told the newspaper.
He added that when rates have risen in the past, a lag of five or six quarters for the impact to be felt has been “the norm”. He also argued that the market may still be too confident in the quality of central bank decisions and their ability to engineer positive outcomes, according to the FT.
Though Pimco thinks a “soft landing” is the most likely outcome for the US economy, Ivascyn told the newspaper, the world’s largest active bond fund manager is avoiding areas of the market that would be most vulnerable in a recession.
The firm, owned by Germany’s Allianz SE, is favoring high-quality government and corporate bonds for now. It is waiting for company credit ratings to be downgraded, which Ivascyn said will prompt forced selling among vehicles such as collateralized loan obligations in the coming months and years. That will be the time to snap up bargains, he told the FT.
Ivascyn cautioned that this cycle might be different to previous ones. Central banks may be less willing to provide support for fear of fueling rising prices, he said to the newspaper, while the fact that so much risk has been transferred to private markets would slow down the deterioration of credit valuations, but not prevent it, he added.
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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
