PIMCO on the USD: Up, but slowly & limited.
Remarks from Mihir P. Worah, Chief Investment Officer Real Return and Asset Allocation
and Geraldine Sundstrom, portfolio manager.
This via Bloomberg:
- Says USD will continue to appreciate at slow pace
- Limits to how far it can rise
- "If the USD gets too strong, it is likely to lead to tighter financial conditions, causing large U.S. corporations highly exposed to overseas demand to suffer," which may lead to a stock-market selloff and stall Fed hikes
- Favors USD against basket of currencies in Asia, favours ... long high- yielding currencies versus low-yielding Asian currencies including CNY
- "We believe these positions would perform well if tariffs were disproportionately imposed on the Asian exporters, or if growth were to unexpectedly slow in that region."
- Pimco has modest underweight position in EUR, anticipating dovish ECB policy