The fixed income landscape has turned negative over the past few months as the pandemic disrupted housing, auto and the labour markets. While the outlook for bond markets is highly uncertain in the near term, PIMCO Group CIO Dan Ivascyn says the volatility in fixed income markets is creating potential opportunities that can generate an attractive yield.

“No one likes to see the type of repricing we’re seeing across nearly all financial markets, but it is leading to tremendous opportunity. It is really becoming a lender’s market, more so than what we’ve seen for much of the last decade,” Ivascyn says in a Q&A published by PIMCO.

Ivascyn is of the opinion that while most financial assets have an uncertain outlook, value has started to return to the market and central banks will ultimately get inflation back to their target. The PIMCO CIO says inflation and a potential recession is the biggest challenge right now but sees resilience in household credit, asset-backed credit, mortgage credit, banking credit, and financial sector credit.

PIMCO says corporate bonds, high-quality ban paper and mortgage-backed securities look very attractive. In the emerging markets space, Ivascyn suggests being careful with choosing the region and asset class.

The PIMCO executive says that it might be a good time to return to fixed income and long-term value has returned to the market.

View the full insight here.