Pimco's take on housing

Chris Palmeri

October 03, 2005

Pimco, the big bond fund manager run by Bill Gross, has a long record
of beating the market. Their take on housing prices and the economy?
Pimco predicts a "stagflationary soft landing." The fund company
figures the Federal Reserve has just about reached its limit on
interest rate hikes and will stop the increases at a 4% federal funds
rate. As a result, Pimco expects that housing price appreciation will
slow to the mid-single digits. Couple that with higher energy prices
and Pimco expects the economy to slow slightly, hence the
stagflation. But the bond gurus aren't taking any chances. Fearing a
housing meltdown in some markets, Pimco has representatives riding
around with realtors in some cities, monitoring listing times, price
reductions and other signs that housing is slowing down even more
than in Pimco's rather benign forecast. Stay tuned.

02:40 PM