PIMCO recently held their annual secular forum at which they addressed a number of macro trends that impact their three- to five-year secular outlook for the global fixed income markets. The discussion also focused on a number of issues that would have an impact on growth and inflation in the U.S., Europe, Asia and the Emerging Markets. As follows is a summary of four key factors that PIMCO believes will impact the global financial markets over the next several years.
- Continued global growth that is less driven by the major industrial countries and more a result of emerging market output that is in the middle of a breakout phase.
- Upward trend in inflationary pressures reflecting a spillover of global demand into commodities, which in turn will put upward pressure on wages in emerging market economies.
- A slowdown in corporate profits in industrial countries relative to both labor and overall production.
- Institutional re-alignments in the global financial sector. Regulatory changes will be the catalyst in developed industrial economies, while emerging markets will see change from growing economies and the development of sovereign wealth funds.
Please click here for a more detailed overview of the outlook from Mohamed El-Erian, PIMCO’s Co-CIO and Co-CEO.