'I think the Fed could cut as soon as July and I think that they'll go 50 basis points,' says Mark Kiesel Pimco's chief investment officer of global credit.
then ignited trade tensions with Mexico in late May. He threatened to slap 5% tariffs on goods from the southern U.S. neighbor to pressure Mexico to reduce the flow of migrants crossing the border.
"I think if we got the initial 5% and then Congress started to put pressure on Trump, and if that's all we got, then perhaps we're set up for the Fed to be on hold," he said. "But if we get escalation of those tariffs with Mexico, then I think the business uncertainty will increase materially." The firm thinks stocks are high and credit spreads are tight, "particularly given the fact that we think recession risk is increasing," he said. "So any rally in risk assets we would look to de-risk portfolios, and we have been, in fact, on the more cautious side of markets, particularly equities and credit."
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