PIMCO's Ivascyn: Odds of June Rate Hike Better than Even

May 25 2016 | 8:23pm ET

By Jennifer Ablan (Reuters) – PIMCO Group Chief Investment Officer Dan Ivascyn said on Wednesday he sees a better than 50/50 chance of a Federal Reserve rate increase in June.

In a telephone interview, Ivascyn said Pacific Investment Management Co. is ready to pounce on volatile markets stemming from a Fed move. "When the markets overreact, you want to be aggressively buying," he said.

Ivascyn, who helps oversee $1.5 trillion, said PIMCO, a unit of Allianz SE, has placed bets that the Fed will move sooner rather than later.

"(Fed officials) have been going out of their way to communicate a more hawkish stance," Ivascyn said about a rate increase.

Last week, New York Fed President William Dudley said the U.S. economy could be strong enough to warrant an interest rate rise in June or July, reinforcing the drum beat from within the central bank that rate hikes are coming soon. A range of policymakers with normally varying views on monetary policy now say a rate increase is possible at the next policy meeting in June.

Ivascyn said PIMCO has "a little bit of a strong dollar emphasis, on the margin" in its portfolios. He said PIMCO has been reducing its energy-related exposure as well as corporate credits, given the run-up in prices in recent months.

"At these valuations, corporate credit looks a little less interesting here," Ivascyn said.

The $57.9 billion PIMCO Income fund, which Ivascyn oversees, gained 2.64 percent in 2015, beating 97 percent of its peer category, according to Morningstar data.


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