PIMCO has released its latest 6–12 month outlook on the global economy and markets. PIMCO Economist Tiffany Wilding and PIMCO CIO of Global Fixed Income Andrew Balls write: “We believe three forces – tariff effects, the technology investment boom, and challenges to institutions – will likely drive greater economic and capital market volatility within the U.S. and globally.”
Economic outlook takeaways
Clashing forces create winners and losers: A growing tension among three macro forces – trade frictions, the AI investment boom, and challenges to institutions including the Federal Reserve – could test conventional economic and investment frameworks, drive volatility, and widen the gap between winners and losers, both in the U.S. and globally.
Delayed tariff effects begin to bite: Economic growth has been surprisingly resilient, but that appears likely to change. After preemptive actions boosted global trade flows and goods production, many countries now face a transition, with mounting pressure from tariffs and constrained fiscal flexibility. In the U.S., we believe the main risk from tariffs isn’t a price adjustment – it’s that unemployment could rise. The Fed and other central banks have ample room for more interest rate cuts.
Tech investment provides support amid signs of weakness: Global data trends point to a weaker period ahead before targeted fiscal stimulus in some regions starts to kick in. At the same time, resilient tech investment, especially in the U.S. and China, is poised to continue, with potentially growing effects on productivity and the labor market.
Also read: Australian Economic View – October 2025 – Janus Henderson
Investment outlook takeaways
Bond yields offer durable opportunities, while cash rates are poised to decline: Locking in today’s attractive starting bond yields can support strong returns and income potential in the years ahead across a variety of economic scenarios. With rates on cash-like investments likely to decline alongside central bank policy rates, we expect bonds to outperform. We favor short and intermediate bond maturities.
Global diversification can enhance outperformance potential: Investors can take advantage of today’s unusual abundance of global fixed income opportunities, with attractive real and nominal yields available in a variety of countries. Diversification across regions and currencies is an effective way to fortify portfolios and harvest sources of return.
Relative value can be a guide across the public–private credit continuum: The conventional divide between public and private credit is giving way to a more integrated view. We see a continuum of opportunity spanning across these markets that should be evaluated on differences in liquidity and economic sensitivity. We focus on high quality assets and see strong return potential in asset-based finance.
