Its impossible...

...to know what net positions the men of Newport Beach are running.  But it is always instructive to listen to what they think we think they think they have.

Pacific Investment Management Co. is favoring local bonds in Brazil, Mexico and South Africa as emerging-market notes pay more than U.S. high-yield corporate debt for the first time in two years.

Relatively high amounts earned on securities in developing nations offer compensation for risks from slower growth to faster inflation worldwide, according to Ramin Toloui, global co-head of emerging-markets portfolio management at Pimco. The manager of the world’s biggest fixed-income fund has a positive outlook on the currencies of Brazil, Mexico, China and India and likes “high-quality” dollar sovereign debt from the first three countries, along with Russia and South Korea, he said.

Emerging-market local debt offered 5.22 percent on May 7, 25 basis points more than high-yield bonds in the U.S., the biggest premium since May 2011, according to indexes from JPMorgan Chase & Co. and Barclays Plc. Developing economies will expand 5.3 percent this year, compared with a 1.2 percent growth in advanced nations, according to forecasts by the International Monetary Fund released on April 16.