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00:00Let's talk about the investment process at PIMCO, just take us inside the investment committee, if you can. At the center of it, the core, you've got Fed funds and the further out you go, you've got all these circles. Can you just go through what these circles are and how far away you want to move away from the core of fixed income? Yeah. So. So we've talked about this in our outlook as a framework we've used for 10 years longer at the center of global financial markets. You have the Fed short and intermediate interest rates in the US in the in the in the G 10. And this is important to the stability there is important in terms of the the causal effects on on risk assets. So as you move out of our out of our concentric circles, into credit, into emerging markets, into equities, we think a prerequisite in asset allocation portfolio, say wanting to add more equity type risk is wanting to see that stability in global fixed income and hopefully the restoration of more normal correlation between fixed income and risk assets and equity markets. So last year you destabilised the center of that global asset markets, the Fed funds rate expectations, big shift in terms of the Fed or, you know, Treasury, Treasury yields in the US very destabilising for global equities. This year we have the prospect of lower fixed income volatility and really good yields in terms of core fixed income, which is is very important. So in our in our investment decision making, we're going to be emphasizing core fixed income, good yields that you can get there and then be careful about the risk that you add. High, high quality investment grade credit makes sense. But we don't need to have lower quality credit, high yield. We can get good enough returns. We think in the center of this distribution and and, you know, continue to respect the fact that the recession risk is two ways. It could be better than our baseline. It could be a lot worse. This is another way of saying I don't like emerging markets right now. Can you build on that a little bit? So I think we are scaling into emerging markets. We have emerging market positions. So ACT affects positions so that local or dollar based. So I think that that's going to depend on your asset allocation. But for us, I think at this stage, core fixed income, you know, very good deals, about 5 percent for kind of core bond funds. Looks very attractive as we get more confidence in terms of the shape of the recovery and or the path for the Fed you can scale into over time. And, you know, Ian was earlier hiking, you know, earlier in the cycle. The yields are quite attractive. So, you know, I think there is good, good opportunities.

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Pimco's Balls Says Core Fixed-Income Yields 'Good Enough,' Avoiding High-Yield

Andrew Balls, CIO for global fixed income at Pacific Investment Management Co. (Pimco), says there is "no need" for his firm to invest in lower-quality assets. "High quality investment-grade credit makes sense. But we don't need to have lower quality credit, high-yield. We can get good enough returns," he says on "Bloomberg Surveillance." (Source: Bloomberg)

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