Brendan Keenan: European budget cuts 'pose growing risk of return to recession'
BOND markets are being driven by pessimism about the economic outlook, as Europe risks falling back into recession with major budget corrections, say analysts at Pacific Investment Management Co (Pimco), which runs the world's largest bond fund.
Scott Mather, Pimco's head of global-portfolio management, told Bloomberg Television that European policies posed "a growing risk" of a return to recession. "Austerity is being pulled forward," he said.
Anthony Crescenzi, a money manager at Pimco, wrote to clients that shrinking difference between short and long-term US bond yields had been "the worst kind" because it was driven by a pessimistic economic outlook.