The worst crisis is the one you don’t see coming.

via Bloomberg:

Daniel Ivascyn says it’s time to take a more “cautious and defensive” strategy with the $113.7 billion Pimco Income Fund.

The chief investment officer of Pacific Investment Management Co. said he’s taking the tack as central banks move away from accommodating policies that have buttressed markets since the 2008 financial crisis.

“For both equity and fixed income investors, we think this means lower returns and, unfortunately, higher volatility,” Ivascyn and Alfred Murata, co-managers of the largest actively managed bond fund, said in a postTuesday on the firm’s website. “This combination creates a much more challenging investment environment.”

The upshot: the fund will increase liquidity and diversification, he said. The plan includes being cautious about U.S. credit while looking for smaller opportunities in the global fixed-income universe.

Liquidity of G3 central banks update to 03 August…IN DOLLAR TERMS (by rising #DX_F )..#ECB & #BoJ have offseted #FED’s balance sheet reductions since the start of Soma reductions. Yearly change BS of G3 CBs slowing but is always > 0 #ES_F #SPX

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