Ideas
Fixed income offers equity-like returns now.
PIMCO believes growth remains resilient and ends 2026 around 2.5%, supported by productivity, technology capex, and fiscal impulses, even as the economy is K-shaped. With equity valuations and spread products elevated and expected returns lower, Jerome sees a compelling multi-year fixed income opportunity globally, offering attractive nominal and real inflation-adjusted returns and potential 6-8% total returns for diversified fixed income strategies, or equity-like returns with a fixed income allocation.
Corporate credit is late-cycle and risky.
Jerome describes corporate credit as a late-cycle environment with uncertainty, valuation, and spread concerns, making it riskier; he would not rely on corporate credit as the only fixed income opportunity and prefers other areas such as securitized assets.
Divergent central banks create global bond opportunities.
Monetary policy is diverging globally for the first time in almost a financial generation, with rate cuts in jurisdictions like Australia and England versus different paths in the US, Canada, Japan, and others. That divergence creates relative value and excess return opportunities across global fixed income; the 10-year Treasury at 4.28% sits within PIMCO's 3.75-4.5% range and provides an income baseline.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
4:53
Fiscal and monetary policy support equities.
Matt expects growth to remain positive, with fiscal impulses from the One Big Beautiful Bill, the lagged effects of Fed easing, and AI capex supporting risk assets like equities into 2026.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
5:40
Small caps benefit from policy impulses.
Small-cap equity ETFs saw $20B of outflows in the first seven months of 2025, then about $13B of inflows after the One Big Beautiful Bill and expected Fed easing; small caps outperformed large caps by about 13% since end-July, earnings revisions are improving, and 2026 double-digit earnings growth is forecast. Matt sees the fundamental bias as positive due to twin monetary and fiscal impulses.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
8:06
Inflation-linked bonds hedge inflation risks.
Matt sees an upward bias toward inflation-linked bonds to infuse inflation protection into bond portfolios, especially since real assets are structurally underweight in client portfolios and inflation risks may be biased higher in the new macroeconomic paradigm.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
8:14
Commodities gain from inflation and flows.
Matt sees an upward bias into the commodity complex as part of an inflation-oriented allocation; broad commodities have done well and had their second-most flows in 2025, and real assets are under-owned.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
8:22
Cyclicals benefit from growth and capex.
Matt sees a sector bias toward cyclicals because they benefit from the same growth formation, capital expenditures, and fiscal provisions such as R&D expensing.
Matt Bartolini
Global Head of Research Strategist, State Street Investment Management
8:41
Global self-sufficiency drives aerospace and defense.
Aerospace and defense stocks continue to receive a bid from new demand channels tied to self-sufficiency and increased defense spending globally, not just the US's forecast $1.5T; Matt notes strength in both US and European aerospace/defense.
SPLS combines passive equities with active bonds.
PIMCO's new SPLS ETF uses the firm's long-running Stocks Plus approach, pairing passive S&P 500 equity beta with active fixed income alpha. Jerome expects repeatable excess returns from active bond management to help the strategy outperform the S&P 500 over time while maintaining equity exposure.
Active fixed income beats passive benchmarks.
Active fixed income managers historically beat benchmarks more than 90% of the time, versus only about 15% of active equity managers. In a late-cycle environment with valuation, spread, and geopolitical uncertainty, active fixed income ETFs can accentuate attractive opportunities and avoid unwanted exposures that passive benchmarks must hold.
Multi-asset strategy provides balance and resilience.
Matt says State Street's multi-asset strategy with Bridgewater (ALW) provides balance and resiliency across asset classes, geographies, and economic environments, which is important in a new macro paradigm with higher inflation and geopolitical risks; real assets are underweight and multi-asset can infuse balance in a one-stop shop.
Gold gains on debasement and underweight.
Gold had its best return since 1979, driven by the debasement trade and a move toward alternative fiat currencies; Matt argues real assets, including gold, are structurally underweight and should be part of a more balanced, resilient portfolio.
Enhanced cash beats traditional cash.
Jerome says investors can step out of traditional cash markets into an actively managed enhanced cash solution, which is still worth 1-2% more in return/yield than traditional cash.
Agency MBS attractive over late-cycle corporates.
Because corporate credit is in a late-cycle environment, Jerome favors securitized assets and agency mortgages as a complement; they remain attractive at current yield and spread levels.
This CNBC video, published January 22, 2026,
features Jerome Schneider, Matt Bartolini
discussing TLT, LQD, Global Fixed Income, Equities, IWM, TIP, DBC, XLI, ITA, SPLS, Active fixed income ETFs, ALLW, GLD, Enhanced cash solution, MBB, Securitized assets.
15 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Jerome Schneider,
Matt Bartolini
· Tickers:
TLT,
LQD,
Global Fixed Income,
Equities,
IWM,
TIP,
DBC,
XLI,
ITA,
SPLS,
Active fixed income ETFs,
ALLW,
GLD,
Enhanced cash solution,
MBB,
Securitized assets
