The risks, macro factors and opportunities behind Western's outlook for the year ahead.
Q2 Market Commentary
We remain cautiously optimistic that the Fed will see the light, that Brexit will move in a benign fashion, and that tariff disputes will subside. Spread sectors and duration remain our focus.
Oil prices have held up well despite data that suggest global growth is weakening.
Insight on Rates
With negative interest rates already in place in Japan and Europe, it’s only a matter of time before they reach the US.
Chart of the Week
Chart courtesy of QS Investors. Source: Bloomberg, 1999 – 2019. Global Economic Policy Uncertainty Index with Current Price GDP Weights. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
Chart of the Week
The idiosyncrasies of niche markets can provide opportunities but require professional expertise.
Perspective on how the coronavirus outbreak may impact investments and economic growth in the days ahead.
Market & Strategy Update
Central bank dovishness and good fundamentals should support spread product vs. government bonds, along with relatively volatile EM debt.
Western Asset examines recent trends in the muni bond market and provides its outlook about conditions ahead.
The Fed’s inflation focus implies a high bar for rate hikes in 2020. Further cuts this year cannot be ruled out if inflation continues to undershoot the Fed’s target.
Fair value for currency volatility reflects current market conditions.
Pessimism surrounding the potential for a positive UK-EU trade deal may be unwarranted.
The European Commission's plan to increase adoption of ESG principles throughout the region is a positive for bond investors.
Policy continuity is the name of the game for now -- with the hurdle to cut rates much lower than the hurdle to raise them.
The Fed's focus on below-target inflation leaves the door open to future rate cuts.
Fourth Quarter Outlook
Looking ahead, we think global growth will slowly improve with inflation remaining modest – continuing to favor spread sectors.
Global fixed income
With Emerging Markets growth projected to accelerate and valuations compelling, debt markets in select EM countries merit careful consideration.
Q4 Market and Strategy Update
With core inflation below even our more dovish estimates, we expect global growth to remain low by historical standards -- but also resilient.
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