Pimco Sees Greater Risk of Flash Crashes, Market Volatility

World financial markets appear more susceptible to flash crashes and bouts of volatility as rules designed to make the system safer have depressed trading activity, according to Pacific Investment Management Co.

Summing up the results of the company’s annual forum last month to plot investment strategy, three senior Pimco executives also wrote in a report that global fixed income and equity markets seem reasonably valued. Over the next three to five years, they see bond yields, stock prices and the dollar rising amid a “cautiously optimistic” outlook for the world economy.