🌍 Old-Fashioned Bond Math for a New-Fashioned Fed
PIMCO's Marc Seidner and Pramol Dhawan argue that new Fed Chair Kevin Warsh is ushering in an era of less forward guidance and more two-way market risk, reviving opportunities for active fixed income management. With the 10-year Treasury yielding about 4.55% (near multi-decade highs in real terms), starting yields historically correlate strongly with five-year forward returns. In an adverse growth or recession scenario, PIMCO estimates high-quality bonds could return 10-20% as rates fall, offering convexity equities lack. The piece also flags concentration risk elsewhere in portfolios: the top 10 S&P 500 names are about 37% of the index, and 31% of BDC private-credit exposure sits in software/tech, making diversified fixed income comparatively more attractive.
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