Andrew Balls, global fixed income CIO at Pimco, announced Tuesday that the firm sees "good value" in the long end of the Treasury yield curve, citing a firm-wide inability to comprehend what generative technology actually does.
Speaking on Bloomberg Surveillance, Balls noted that with the Federal Reserve likely to hike interest rates one or two more times to reach its 2% inflation target, locking up capital with the U.S. government for three decades is the most responsible move for an asset manager whose executives still prefer to print out their emails.
The strategic shift into decades-long government debt comes as the $1.8 trillion asset manager abandons its efforts to participate in the ongoing tech sector rally.
After six months of listening to Silicon Valley founders talk about algorithmic synergy and sentient supply chains, lending money to the federal government until 2054 feels incredibly grounding.
Analysts at the firm reportedly spent the first half of the year attempting to build valuation models for artificial intelligence startups. The initiative was entirely scrapped when the investment committee realized a guaranteed 4.2% yield from the Treasury Department required exactly zero working knowledge of neural networks, machine learning, or prompt engineering.
The massive pivot to the long end of the curve was officially finalized Monday morning, shortly after a software vendor attempted to explain how a large language model could be used to optimize a collateralized loan obligation.