Our central expectation for the European Central Bank (ECB) meeting on 26 October is for the Governing Council to extend asset purchases by nine months at €30 billion per month to September 2018, without yet committing to a specific end date, while strengthening its commitment to keep policy rates and the balance sheet unchanged when asset purchases end next year.

Investors point to improvements in growth, lower inflation and contracting current account deficits as evidence of emerging markets’ resilience to global shocks.

Core inflation continued to run softer than expected in September, a trend that could make the Federal Reserve more cautious about hiking interest rates in December.

When the macroeconomic environment is as good as it gets and valuations are tight, it is time to emphasize caution, capital preservation and diversified sources of carry away from the crowded trades.

While PIMCO’s cyclical outlook is cautious overall, our outlook for emerging markets is more constructive.

We believe it’s not too late for investors to seek attractive relative value opportunities and reposition equity exposures in this aging cycle.

The pivot to backwardation is notable for investors for three key reasons.