Pimco Sees `Growing but Slowing' Global Economy Late in Cycle

(Bloomberg) -- Pacific Investment Management Co. sees a “growing but slowing” global economy a decade after the financial crisis and no imminent recession over the next year, according to a cyclical outlook published Tuesday.

“While being mindful of the risks of an early end, we think it is too early to run for the hills,” says the report by Pimco’s Andrew Balls, chief investment officer for global fixed income, and Joachim Fels, global economic adviser.

For investors, that means:

  • Overweight emerging market currencies, which have become attractively valued after being hit by trade tensions and Federal Reserve rate hikes
  • Go defensive on equities, with U.S. high-quality stocks expected to outperform international markets
  • Buy commodities, such as petroleum, which perform well late in economic cycles
  • Limit interest rate risk by keeping portfolio duration below fixed-income indexes as the Fed raises rates and other central banks remove quantitative easing

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