How U.S. and overseas investment-grade corporate bonds benefit from increasingly negative government bond yields.
Current market conditions make the shorter end of the maturity curve potentially attractive from a risk/reward point of view.
Q2 Market & Strategy Update
While the global growth rate has moderated and is still very modest, we expect it to be slightly better than 3.5% for the year. We view the recent inversion of a portion of the yield curve as a yellow warning sign rather than a flashing red signal of imminent recession.
Is the latest yield curve inversion a cause for concern or a false alarm?
Fixed income update
While we don’t see this credit cycle ending soon, its longevity does warrant extra scrutiny on valuations and some types of of risk.
Chart of the Week
Chart courtesy of ClearBridge Investments. Source: Bloomberg, as of 9/30/19. 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
Current market uncertainties are generating potential opportunities for income investors.
Western Asset examines recent trends in the muni bond market and provides its outlook about conditions ahead.
A changing reaction function
The Fed is becoming more focused on realized inflation and growth, and should remain accommodative even if global growth turns out to be more resilient than currently believed.
Q3 2019 Market Commentary
Despite drastic changes in the investment backdrop, short-term pessimism about growth is overdone and higher rates are likely only in the distant future.
Why Western Asset believes the current positive phase of the credit cycle will likely continue.
There's reason and room for more rate cuts ahead, but it's unclear if that includes September.
Commercial Real Estate Finance
These real-estate loan securities are growing in number, requiring strong, fundamentals-based analysis.
3Q 2019 Market & Strategy Update
The Fed and other central banks have started focusing on core inflation outcomes - a decisive policy shift which suggests that rates will be "low for longer" than previously expected.
As threatening as natural disasters can be, their impact on the municipal bond market remains fairly muted.
Focus on the Economy
Despite widespread worries about the yield curve, what we've seen recently is not a true inversion. But preventing that from occurring is one reason the Fed could move to lower rates later this year.
Understanding the causes
What's behind the persistently low inflation that could drive the Fed to cut rates this year? A host of factors suggest the Fed's 2% target for inflation is overly optimistic.
June Meeting Analysis
Wednesday's Fed statement makes a rate cut in July the base case for investors, with a 25-basis-point move most likely.
Though still highly unlikely, we do not entirely rule out an all-out trade war. It would take near-complete disruption of trade flows to threaten recession in the US.
The bond market has already priced in cuts later this year. Though possibly ahead of itself in terms of timing, the market’s call on the direction of rates looks right, notes Western Asset’s John Bellows.
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