Pimco calls market anxiety over Federal Reserve’s inflation credentials overdone

One of the largest fixed-income managers on the planet thinks the bond market is scaring itself. Marc Seidner, Pimco’s Chief Investment Officer for non-traditional strategies, said on August 12 that investor hand-wringing over the Federal Reserve’s inflation-fighting credibility has gone too far, and that current US Treasury yields represent a genuinely attractive entry point. The call puts Pimco on the opposite side of a crowded trade. Fed funds futures are pricing in roughly a 50% probability of a 25-basis-point rate hike at the next Federal Open Market Committee meeting. Seidner’s view: the Fed holds rates exactly where they are through the end of 2026. A tale of two forecasts Seidner’s confidence that rates stay put rests on two pillars. First, inflation data has been moderating, not accelerating. Second, growth signals have softened enough that an additional rate increase would risk tipping the economy into something uglier than a gentle cool-down. Why the yield curve matters here Beyond the near-term rate call, Seidner offered a structural view on the shape of the yield curve. He expects it to steepen, with longer-dated Treasury yields climbing relative to shorter maturities....