U.S. bond giant PIMCO told the Financial Times that recession risks are at their highest in years and warned investors may be underestimating President Donald Trump's resolve to restore the steep tariffs that roiled markets last month.
"We very well may have a recession," investment chief Dan Ivascyn told the FT on Thursday in an interview, alongside Pimco CEO Emmanuel Roman.
"The probabilities are the highest they've been in a few years."
Ivascyn said he expects "lower ultimate tariff rates" over time, adding that the asset manager would closely monitor how the U.S. administration adjusts policy in response to market moves and signals from the Federal Reserve.
PIMCO has slightly raised its U.S. government debt exposure over the past two months, focusing on shorter maturities, Ivascyn told the FT, adding that rising market volatility and a worsening fiscal outlook were making sovereign bonds elsewhere more attractive.
"The US is not going to lose its reserve currency status soon," Ivascyn said. "But . . . it's hard to see meaningful progress on deficits."
PIMCO did not immediately respond to a Reuters request for comment.
