The PIMCO chief investment officer speaks
Dan Ivascyn oversees about $1.5 trillion in assets as the co-chief investment officer at PIMCO and he sat down with Bloomberg today. I just had a chance to watch the interview because it was aired as the latest Comey news was breaking.
One thing was clear, Ivascyn is a dollar bear. He didn't reveal any thoughts on the currency but he made a bunch of points that add up to the same thing.
First, he said that while the Fed will probably hike on June 14 and once more this year, it will also be extremely cautious. In addition, he said he expects US inflation to disappoint and fall late in the year.
He emphasized that many of the moves in bonds this year have been driven by the Trump trade but he basically sees disappointment there on all fronts. On taxes, he said broad tax reform is unlikely and that a tax cut is the only thing coming. On infrastructure, Ivascyn said it will be a major disappointment, falling far short of the talk of $1 trillion. Even on regulation, he said that it will ultimately come down to looser enforcement rather than reform.
On bonds, he was asked if 10-year yields could fall to 2% and he said it could easily happen and then volunteered that rates could easily hit 1.5%. On top of that, he said US Treasuries were looking cheap comparatively.
Add it all up and it's tough to see a case for US dollar strength.
