PIMCO sees 4 reasons why yields are going negative

According to PIMCO, negative yields could be 1) "a consequence of active monetary policy in a world where bond supply and demand is not balanced; 2) "correctly forecasting a sharp economic slowdown"; 3) "a consequence of the ecology of current market participants" ; and 4) the result of "certain investors who have a preferred investment horizon [which] may require a meaningful risk premium to buy bonds with maturities outside their preferred habitat." PIMCO suggests if rates go negative even further "an asset allocation of long equity risk versus underweight core government bond duration remains attractive."



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