We're a lot more defensive," warned PIMCO's Daniel Ivascyn, group CIO at the massive bond manager, noting that after the best year-to-date performance since 2003, the fund is paring its positions in government debt on fears that a breakthrough in US-China trade talks could trigger a violent sell-off.

"Even if we get a narrow trade agreement [between the US and China] we could see a pretty powerful snapback in yields."

However, as The FT reports, while PIMCO is lightening up on their positions in the UK and European bond markets, it is reducing exposure to the US government bond markets less. 

"We like the US market more - it still has more room to rally in a global flight to safety," Mr Ivascyn said.

"But it wouldn't take much of an uptick in inflation to cause a meaningful repricing."

Ivascyn may appear more constructive on growth and inflation but, as FT notes, he tempers his enthusiasm by noting that,

"We think we'll at best get a partial agreement on trade, and this friction will be with us for a long time."