Odd Lots Podcast: "Dan Ivascyn Is Excited About a New Era in Fixed Income"

Bloomberg Odd Lots | December 8, 2025
Guests: Dan Ivascyn (CIO, PIMCO)
Hosts: Joe Weisenthal and Tracy Alloway

Overview

This episode of Odd Lots, coinciding with the podcast’s 10-year anniversary, features a deep-dive conversation with Dan Ivascyn, Chief Investment Officer at PIMCO. The discussion explores seismic shifts in the fixed income landscape since 2015, current macro uncertainty, private credit’s rapid ascent, AI’s financing boom, global bond opportunities, and fundamental changes in investment culture and technology.

Key Discussion Points & Insights

1. Then and Now: The Fixed Income Landscape (02:05–04:48)

• Pre-2015: Zero interest rate policy (ZIRP) and limited bond yields defined investing a decade ago.
• Now: Rates have “never been more different,” with bond markets and private credit instruments radically reshaped.
• Host Reflection: "If you go back and look at some of the old episodes ... the private credit market now basically rivals the public credit market in terms of size..." — Tracy Alloway (03:27)

2. The Fed’s Path Into 2026 and Rate Cutting Uncertainty (05:35–07:33)

• Rate outlook: PIMCO expects a rate cut at the upcoming Fed meeting and modest further cuts in 2026.
  • “The general view today at PIMCO with significant uncertainty is that they probably do get rates down another half a percent or so next year…” — Dan Ivascyn (06:09)
• Growth & Inflation: Expecting a mild re-acceleration in early 2026 due to AI-linked capital investment and positive tax impacts, but inflation likely stays above target.
• Policy Dilemma: If the Fed cuts into stronger data, it could backfire by causing long-term yields to rise.

3. The Independence of the Fed & Market Premiums (08:40–10:23)

• Concerns over politics and the possibility of a less independent Fed (e.g., with Kevin Hassett as chair) are “inputs ... not a major concern.”
• “We still think the chair is one vote, so to speak, and we have a committee that will continue to focus on the dual mandate.” (09:12)

4. Inflation Targeting: Is 2% Still a Real Thing? (11:11–13:05)

• Fed’s 2% target matters, but only as long as inflation expectations remain anchored.
  • “To the extent that inflationary expectations remain well contained, we do think that the central bank’s willing to look through some of the more higher frequency data.” — Dan Ivascyn (11:11)

5. The Term Premium & Fiscal "Sweet Spot" (13:05–15:09)

• Elevated term premiums are back, making long-maturity bonds attractive — but fiscal imprudence can be a double-edged sword.
• “...we want just enough fiscal irresponsibility where we and our end investors get paid more to lend, but not so much where it becomes a concern in terms of the overall viability of the system.” — Dan Ivascyn (14:21)

6. Role of Bonds in Portfolios, Valuations & Correlations (16:50–20:23)

• Bonds underperformed stocks badly in the last decade, but starting valuations now look favorable.
• Correlations shifted with inflation — traditional “bonds as hedge” didn’t work well in a world of inflation risk, but may improve.
  • “What the relative valuations would suggest is that there’s a good chance that bonds outperform stocks over the next five or ten years…” — Dan Ivascyn (17:34)

7. The "Sell America" Trade & Global Bond Opportunities (20:34–25:43)

• "Sell America" pessimism proved overblown because of starting yields and valuations.
• Global bond investing is back: “Even from a US dollar based investor’s perspective, there’s great yield, great sources of diversification.” (21:22)
• International opportunities have improved with the repricing of global debt and less policy intervention.

8. Private Credit: Growth, Opaqueness, & Cyclicality (25:43–33:24)

• Private credit structures aren’t entirely new, but the scale and risks are: “The difference today is that you have this massive capital investment need. So the deals are larger, but a lot of the technology has just been dusted off, so to speak, for the new era.” (26:23)
• Historical performance: High-yield outperformance was cyclical, not a constant free lunch.
• “Since the GFC just blindly buying the lowest quality credit … you generated 7% a year more than high quality bonds. And that explains a lot.” (28:06)
• Liquidity and economic sensitivity are now critical axes. “You just want to make sure you get paid enough. … You’re not getting paid what you got to take that risk five or ten years ago.” (29:36)
• Competitive dealmaking sometimes means saying no: “Given tight spreads, given the competition, you just have to say no.” (31:07)
• “You can go up in quality without again giving up return. And in some cases … picking up expected return.” (32:22)

9. AI, Tech, and Bond Financing Structures (35:23–39:56)

• Massive financing needs for AI infrastructure are driving new (but fundamentally familiar) off-balance-sheet structures with contingent or “make-whole” guarantees.
• Due diligence is crucial: “It’s critically important that you do your own fundamental credit work.” (38:12)
• “It is very, very dangerous to assume something has an investment grade rating just because the rating agencies assign a rating to it.” (38:30)

10. The Nature of Credit “Cockroaches” and Systemic Risk (42:07–46:30)

• Recent credit blowups (e.g., “cockroaches”) have been contained, not systemic.
• “There's likely going to be disappointment in certain areas of the credit markets that have performed exceptionally well over the last 10 to 15 years. ... That's how markets work.” (43:11)
• Regulatory focus has shifted: “Regulators hate bailing out the same sectors twice.” (45:14)

11. Housing Outlook and Underlying Fundamentals (46:30–49:51)

• PIMCO remains bullish on US housing-related investments, especially loans backed by real collateral.
• “When you’re lending against a household that has 70 percentage points of borrower equity, your home can go down quite a bit and you’re very well protected.” (47:39)
• But structural shortages mean affordability will remain tough absent a building surge.

12. Global Political Volatility & Fiscal Policy (49:51–53:51)

• Political dynamics are driving economics, reversing previous norms.
  • “Today it feels like it’s a bit reversed where political priorities, geopolitical tensions are driving economics.” (51:35)
• Prudent global diversification is key: some EM and developed markets present relatively attractive opportunities for yield and fiscal responsibility.

13. PIMCO Culture, Technology, and AI Integration (53:51–58:54)

• PIMCO has evolved since Bill Gross’ departure — more specialized, more global, and more tech-driven.
• AI/automation are rapidly being adopted: “My own use of AI … has gone up almost exponentially over the last year or two.” (56:59)
• Younger staff leading the way in AI adoption.
• “It's going to be important in so many ways and we're really, really embracing it here at Pimco.” (58:12)

Notable Quotes & Memorable Moments

• On Today’s Bond Market:
  • “Relative valuations would suggest that there's a good chance that bonds outperform stocks over the next five or ten years...” — Dan Ivascyn (17:34)
• On Private Credit Market Complacency:
  • “You just want to make sure you get paid enough. ... You're not getting paid what you got to take that risk five or ten years ago.” — Dan Ivascyn (29:36)
• On Credit Quality and Rating Agencies:
  • “It is very, very dangerous to assume something has an investment grade rating just because the rating agencies assign a rating to it. It's critically important that you do your own credit work today.” — Dan Ivascyn (38:30)
• On The Regulatory Cycle:
  • “Regulators hate bailing out the same sectors twice.” — Dan Ivascyn (45:14)
• On AI in Investment Management:
  • “My own use of AI, both at home and at the office has gone up almost exponentially over the last year or two. ... It's the younger folks that we hired over the last year that are helping us with a lot of this perspective.” — Dan Ivascyn (56:59)
• On Political Influence:
  • “Today it feels like it's a bit reversed where political priorities, geopolitical tensions are driving economics.” — Dan Ivascyn (51:35)

Timestamps for Important Segments

• 02:05 — Podcast anniversary reflections & the changing rates environment
• 05:35 — Short & long-term Fed policy outlook, economic reacceleration
• 08:40 — Fed independence & implications for investors
• 11:11 — Inflation target credibility and macro expectations
• 13:05 — Term premium, deficits, and bond opportunity set
• 17:34 — Bonds' role in portfolios and future prospects
• 20:34 — "Sell America" trade and the rise of global bond investing
• 25:43 — Private credit evolution, risks & competitive pressures
• 35:23 — AI-driven capital investment and financing structures
• 42:07 — Recent credit blowups and systemic risk
• 46:30 — Housing market, borrower fundamentals & structural shortages
• 49:51 — Political volatility, fiscal profligacy, and global diversification
• 53:51 — Pimco’s cultural and technological evolution
• 56:59 — AI’s adoption in asset management & workflow

Recap

Dan Ivascyn paints a nuanced and cautiously optimistic outlook for fixed income, highlighting attractive bond valuations, elevated term premiums, and a new era of both risk and opportunity—particularly as technology, private credit innovation, and global market fragmentation create fresh investment dynamics. He urges discipline: higher returns are possible, but only for those who don’t chase yield at any cost and who do the difficult fundamental work. Throughout, both hosts and guest return to two prevailing themes: the necessity of adaptation (technological, strategic, global) and the enduring value of humility about future uncertainties.

For anyone interested in macro strategy, fixed income, credit, or investment management culture, this episode is a masterclass in how the world has changed and how to survive (and thrive) in the new era.