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Bond fund giant Pimco is holding a smaller than usual position in US Treasuries and prefers the bonds of countries such as the UK and Canada, as it believes inflationary pressures may lead the Federal Reserve to cut interest rates more slowly than other major central banks.
Andrew Balls, chief investment officer for global fixed income at the $1.9tn-in-assets firm, told the Financial Times that weaker economic growth in some countries was helping ease price pressures there faster than in the US.
“Outside of the US . . . we are seeing more evidence of inflation correcting,” he said. “I think you see the balance of risks on the Fed going slower [in cutting rates] than is priced in but outside the US there is some risk of central banks delivering more than is priced in.”
