Investors Must Be Nimble in Fast-Moving Cycle, Pimco’s Crescenzi Says

(Bloomberg) -- The current economic cycle is moving so fast that Pimco market strategist Anthony Crescenzi has a word of caution for investors: Pay attention.

“It’s important to be on your toes, it’s important to be active with portfolio management, to be thinking more about security selection, regional selections,” Crescenzi, author of “The Strategic Bond Investor,” said in an interview on Bloomberg TV’s Surveillance on Tuesday.

At issue is just where the U.S. economy is in terms of its growth cycle and how quickly the Federal Reserve will need to raise interest rates to contain inflation. 

“The economic cycle is moving at warp speed,” the Pacific Investment Management Co. portfolio manager said. “We’re probably at mid-cycle. Look at the unemployment rate -- 4.8%. What is a late cycle condition? An unemployment rate that’s lower, and that lower rate -- full employment -- could be achieved next year.” 

Market projections already are building in rate hikes for next year, although some strategists say the Fed will wait until 2023.

“Yield curve movement speaks to this idea of a fast-moving cycle,” Crescenzi said. “The yield curve again has flattened recently and that’s something that happens later in the cycle, because the Federal Reserve is raising the short-term rate.”

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