PIMCO Portfolio Manager on ECB and Bond Markets (with Francine Lacqua)

Konstantin Vite from PIMCO discusses the ECB's rate hike, expecting one or two more hikes but noting the backdrop is different from 2022. He sees the growth outlook as too optimistic and focuses on quality credit and periphery bonds. He finds fixed income attractive relative to equities.

Yields up , short term, interviewee explicit

explicit

NDX sideways , short term, interviewee implicit

implicit

RUT

Oil

Metals

USD

PIMCO 8.5
Asset Manager $2100.00B
Konstantin Vite 8.5

PIMCO Portfolio Manager on ECB and Bond Markets (with Francine Lacqua)

ndx

Vite says fixed income looks very attractive compared to equity valuations, implying a less favorable view on equities relative to bonds, suggesting a sideways or cautious view on equity indices like NDX.

yields

Yields are very attractive right now. Policy rates are at reasonable levels. The 10 year rates are reasonable levels.

16 calls

-2

no reliable edge (random outcomes)

5/18/2026 9:01:25 PM	medium term cautious up	20 days later	-2.46%	-1.23%
4/6/2026 10:30:45 PM	short term cautious up	6 days later	-1.06%	-0.53%
3/25/2026 12:26:08 AM	medium term cautious down	20 days later	-3.03%	+1.52%
11/25/2025 8:46:35 PM	short term cautious down	5 days later	+2.45%	-1.23%
11/12/2025 4:29:08 PM	medium term cautious down	20 days later	-1.34%	+0.67%
11/5/2025 12:18:17 AM	medium term cautious down	20 days later	-2.32%	+1.16%
10/24/2025 5:08:46 PM	short term cautious down	7 days later	+2.73%	-1.36%
10/15/2025 10:59:52 PM	medium term cautious down	20 days later	+4.55%	-2.28%
10/2/2025 6:11:21 PM	medium term sharp down	20 days later	-3.11%	+4.66%
9/30/2025 9:58:43 PM	short term up	5 days later	+1.36%	+1.36%
9/17/2025 10:02:22 PM	short term cautious down	5 days later	+0.39%	-0.19%
9/16/2025 9:04:34 PM	short term sharp down	5 days later	+1.64%	-2.47%
9/12/2025 11:53:46 AM	medium term cautious down	21 days later	+3.17%	-1.59%
9/11/2025 5:44:45 PM	medium term cautious down	20 days later	+0.66%	-0.33%
8/22/2025 6:06:13 PM	short term down	8 days later	+0.05%	-0.05%
8/12/2025 10:24:43 PM	short term sharp down	5 days later	+2.43%	-3.65%

Show all 16 yields results

ECB raised rates; is one and done or more cautious?

Francine Lacqua
Konstantin Vite

Baseline is for two rate hikes. This is not 2022; the negative supply shock is not matched by positive demand shock. ECB is at neutral, so hiking now is different from Fed/BOE which are above neutral.

One or two hikes should be robust across a range of scenarios and not something that would need to be reversed quickly.
Would another hike or two be a policy mistake?

Francine Lacqua
Konstantin Vite

Growth outlook is too optimistic; ECB projects 0.8% GDP but we see more like 0.5% or lower. Core inflation hasn't normalized even before the conflict.

The neutral range is 1.75-2.50, so two hikes would put rates at the upper end.
Do you worry about GDP?

Francine Lacqua
Konstantin Vite

Q1 was soft, Q2 doesn't look great either. PMIs point to marginal negative growth, so a technical recession in H1 is possible.
What are you buying right now?

Francine Lacqua
Konstantin Vite

Focus on quality. You can stay short in interest rate risk and up in quality credit and earn a good return. More careful on economically sensitive parts of the market.

After eight years of negative rates, you don't have to stretch for returns anymore.
Difference between German Bunds and Italian BTPs?

Francine Lacqua
Konstantin Vite

Constructive on periphery. Spread is around 77, was around 60 before the crisis. Room for compression given change in fiscal stance in Germany.
Difference between equities and bond market signals?

Francine Lacqua
Konstantin Vite

Bond markets are doing their job; fundamentals come into sharper relief. Yields are attractive globally. Fixed income looks very attractive compared to equity valuations.

We saw a 50 basis point repricing in the 10-year German bond in two days after the debt break was abolished.

SignalTube

markets at a glance