Daniel J. Ivascyn, Group Chief Investment Officer: Let me first start with the economic forecast. We see a very significant and sharp hit to growth over the next couple of quarters. When we compare our base case outlook to some of the base case outlooks out there in the marketplace, we're a bit more constructive in terms of the degree of the economic shock. We do believe that towards the end of this year, at least in the base case, this virus begins to get under control. And in the process, we see some form of U-shaped recovery with perhaps positive growth again later this year.

This is a very, very unique shock. You've seen this reflected in negative price action across nearly every segment of the financial markets on a global basis. But the good news from the fixed income markets perspective is that we see some type of stability off in the distant future. This is very, very different than the global financial crisis where you had a banking system that needed to be recapitalized, you had tremendous amount of credit risk across the system, a shock requiring massive changes to the regulatory structure. When you look forward in time, it was deeply uncertain in terms of where we were headed and how long it would take for the economy to recover.

And in the fixed income markets today, when you look at the spread levels, many high quality sectors have widened out to extreme levels, which should benefit even before the economy recovers. So it doesn't necessarily have to be more complicated than really, really focusing on the sectors that we believe should be resilient from a credit perspective and should stabilize well ahead of any actual recovery in the economy.

And today, PIMCO across strategies is operating with a significant mindset to preserve capital, maintain liquidity, which allows us to be flexible in maintaining the best position on behalf of our clients and understanding what risks are appropriate for different strategies. What we're doing is fine tuning, using techniques that are somewhat tried and true to manage through these periods of volatility, to maintain that flexibility to preserve and then to be able to participate in the recovery that we may have begun to see over the course of the last few days, at least in the high quality segment of the market.

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Past performance is not a guarantee or a reliable indicator of future results.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Sovereign securities are generally backed by the issuing government. Obligations of U.S. government agencies and authorities are supported by varying degrees, but are generally not backed by the full faith of the U.S. government. Portfolios that invest in such securities are not guaranteed and will fluctuate in value. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. U.S. agency mortgage-backed securities issued by Ginnie Mae (GNMA) are backed by the full faith and credit of the United States government. Securities issued by Freddie Mac (FHLMC) and Fannie Mae (FNMA) provide an agency guarantee of timely repayment of principal and interest but are not backed by the full faith and credit of the U.S. government. Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to factors such as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. The credit quality of a particular security or group of securities does not ensure the stability or safety of the overall portfolio. Diversification does not ensure against loss.

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