Pimco's Mark Kiesel: Time to buy more bonds as U.S. in good shape

Pimco's Mark Kiesel: Time to buy more bonds as U.S. in good shape
Bonds of consumer-oriented companies offer “significant value," he says
MAY 16, 2016
By  Bloomberg
The U.S. economy is “doing fine,” which means it's a good time to add credit to your portfolio, according to Mark Kiesel, chief investment officer for global credit at Pacific Investment Management Co. Bonds of consumer-oriented companies offer “significant value” now that spenders in the U.S. are in their best shape in a decade, Mr. Kiesel said in a television interview on Bloomberg on Monday. He said Pimco sees “significant value” in sectors including gaming, telecommunications, cable and health care. “Now is a good time to increase credit,” Mr. Kiesel said. “We think it's an income world in a 1 percent to 3 percent real growth environment. That should favor select credit investments, specifically housing-related sectors and consumer sectors.” Despite a three-month rally in junk bonds Pimco remains “more selective” and is reducing exposure to debt of risky energy companies. In high-yield, the investment company favors bonds of building materials, gaming and health care companies. The extra yield investors demand to hold high-yield debt has fallen to 6.34 percentage points above comparable Treasuries, down from 8.97 percentage points on Feb. 11, according to data compiled by Bloomberg. Mr. Kiesel said stabilization in China, rebounding oil prices and tightness in the U.S. labor market should push inflation to 2% by the end of the year. He recommended investors buy Treasury Inflation Protected Securities, or TIPS, to hedge against inflation rising over time. Pimco also expects one to two interest rate hikes from the U.S. Federal Reserve this year. Futures traders are forecasting a 55% chance of one hike by year-end.

Latest News

Bridgewater's flagship hedge fund surges amid volatile markets
Bridgewater's flagship hedge fund surges amid volatile markets

The firm's flagship fund, which invests in stocks, bonds, currencies, and commodities, saw accelerated gains as some peers lost ground.

ICI floats '40 Act revamp to support middle-class wealth creation
ICI floats '40 Act revamp to support middle-class wealth creation

Policy proposal offers recommendations on dual-share class funds, semi-transparent ETFs, and expanded flexibility for closed-end funds to include private market assets.

Trump-induced turbulence tests 60-40 strategy's limits
Trump-induced turbulence tests 60-40 strategy's limits

With bonds failing to provide a safety net for steeply falling stock prices, many investors are letting go of their "set it and forget it" approach.

More workers dipped into their retirement savings last year, Vanguard finds
More workers dipped into their retirement savings last year, Vanguard finds

Sneak peek into annual defined contribution plan report shows average participant balances reached an all-time high amid rising equity markets.

Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain
Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain

The iconic actor's death alongside his wife, Betsy Arakawa, leaves pressing questions about what happens next to his assets.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies