Capital Market Assumptions, February 2021

PIMCO’s capital market assumptions (CMAs) are typically updated twice a year to reflect changes in markets and firm views. Last year, the COVID-19 crisis led to a rapid sell-off in equity and credit markets in March, but markets quickly rebounded following government relief packages and dovish Federal Reserve policies, which included cutting short-term rates to zero. We now expect the U.S. cash rate to average near zero over the next five years, while at the same time we’ve modestly increased our estimates of U.S. GDP and inflation. Other forecasts include