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

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.