PIMCO’s Fed Forecasting Track Record

At the request of an interested party, an analyst of our acquaintance did a full review of PIMCO’s track record as a Fed forecaster.

Long story short, their public track is rather poor. Whatever insight PIMCO gleaned from being the world’s biggest bond fund was consistently overridden by their talking their book, rather than making good forecasts.

Indeed, I can suggest that a Bond fund manager forecasting either a drop in Fed Funds or the end of a Fed tightening cycle is no different than a long only equity manager advising investors to buy the dip. That is each of their inherent biases.

I did find the call demanding Greenspan cause a housing bubble, and the drumbeat for a GSE bailout to be in hindsight, to be terribly wrongheaded . . .

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UPDATE:  June 19, 2009 9:44am

A fund manager just called to point out that there is another, potentially more serious issue: PIMCO is a giant advertiser on various FinTV channels, and they have had an open mike at these outlets. This manager wonders if the lack of challenges to consistently poor calls is mereyl an affectation, or a related conflict of interest. I have no idea, but it sure is an interesting question.

If anyone from PIMCO wishes to respond, I will give them the platform to respond to any of these issues.

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SeePaul McCulley’s Complete Fed Forecast Track Record

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