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07 December 2023

Pimco prefers German bonds to US Treasuries

Mohamed El Erian (SUPPLIED)

By Reuters

The chief executive of Pimco, the world's biggest bond fund, voiced concerns yesterday about massive US debt levels, saying he preferred to invest in German government bonds than Treasuries in the current environment.

Mohamed El Erian, head of Pacific Investment Management Co, called Greece a "massive wake-up call", saying its debt crisis threatened to infect other nations and push investors into safe-haven bond markets.

US Treasuries are traditionally seen as the preferred safe haven, but El-Erian said that German bonds were likely to outperform them, given Washington's government debt to gross domestic product ratio of more than 60 per cent. "As we stand today, we prefer to take interest rate risk like government bonds in Germany which has much better conditions than in the United States," said El Erian.

He said the US faced structural issues which its policymakers would have to address this year.

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