With borrowing in the U.S. and the U.K. at record levels, deficit concerns have prompted
“This leaves us with portfolios that appear, more than at other times, to be hugging the benchmarks with no bold positioning,” McCulley wrote. “We’re making a very active decision to run light on risk.”
Instead, PIMCO is favoring sovereign debt, foreign corporate bonds, currencies in emerging markets, Build America Bonds and municipal bonds, McCulley said.
PIMCO is also warning investors the market could sink dramatically as soon as the