PIMCO’s Ivascyn sees weaker dollar, tame inflation in 2021

FILE PHOTO: Dan Ivascyn, group chief investment officer for PIMCO, speaks during a Reuters investment summit in New York City, U.S., November 5, 2019. REUTERS/Lucas Jackson

NEW YORK (Reuters) – Bond giant PIMCO expects the U.S. dollar to weaken in 2021 and expects inflation and longer-dated Treasury yields to remain contained, Chief Investment Officer Dan Ivascyn said at the Reuters Global Investment Outlook Summit 2020.

With COVID-19 vaccines on the way, Ivascyn said he anticipates the U.S. economy to recover meaningfully in the coming year, diminishing demand for some safe-haven assets like the U.S. dollar. Across many of its portfolios, PIMCO is underweight the U.S. currency.

Ivascyn also said the Federal Reserve’s stimulative monetary policy and the likely passage of further government relief will not meaningfully increase inflation.

Treasury yields at the long end of the curve, which are particularly sensitive to inflation expectations, are also unlikely to rise dramatically. Even a modest increase in bond yields, however, may see the Fed adjust its Treasury purchases to keep rates lower.

Reporting by Kate Duguid. Editing by Jane Merriman

source: reuters.com