Australia represents one of the most attractive global bond markets, according to a senior executive with bonds specialist Pimco.
The managing director of Pimco, Bill Gross, said in a live hook-up from the US this week that Australia’s interest rates and strong economy were attractive to global bond investors as opposed to the US, which is currently one of the least attractive markets.
Gross said the US economic outlook and the Australian economic outlook were at two different extremes.
He said the US was nearly or currently experiencing a recession, underpinned by a weakening financial asset base.
This was in stark contract to Australia, which was weathering the global financial storm with a more durable economy based on strong commodity exports, the lowest unemployment rate in 30 years and headline inflation of 3.5 per cent.
Gross said Pimco’s investment strategy was markedly different in the US and Australia.
He said that in the US, Pimco was focused on front-end yields and high quality credit but remained cautious on high yield bonds and corporate loans, whereas in Australia the company was moving into the front-end of the market, particularly with the recent purchase of the one-year forward rate.
