Western Asset examines recent trends in the muni bond market and provides its outlook about conditions ahead.
What you need to know about environmental, social and governance investing
A wide spectrum of potential Brexit scenarios still remains. On balance, our base case is for Parliament ultimately to support a “Plan B” deal. Under this outcome or an “extend” scenario, the probabilities now tilt toward a softer or later Brexit; the odds of a "no-deal” Brexit have fallen.
The Emerging Market (EM) bear market could provide resplendent valuation opportunities. In our view, valuation and fundamentals will carry the day. The key to our prognosis: continuation of sustained moderate global growth.
Despite the market spillover from developed market rate volatility, Western Asset does not view the recent market rout as sufficient basis to steer away from Emerging Market debt (EMD).
Chart of the Week
Chart courtesy of Clarion Partners. * Source: CBRE-EA, Clarion Partners Investment Research, Q3 2018, latest available figures. Past performance is no guarantee of future results. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
Chart of the Week
U.S. consumers had a downbeat December; China-U.S. trade talks were set to reconvene in Washington; Mexico's Pemex got yet more help; U.K. clothiers discounted deeply, pre-Brexit
January webcast summary
Subdued global inflation should provide monetary policymakers with a ramp to be more accommodative and perhaps pull back from their normalization efforts. We’re encouraged by the Fed's latest commitment to be more data-dependent.
We expect that the Fed will eventually adopt a “wait-and-see” strategy this year, with at most one more rate hike in 2019.
Income and global credit are becoming mainstays of fixed-income investing – an actively managed, unconstrained approach can be a valuable tool to face today's rapidly-changing market conditions.
Q4 Market Commentary
Continuing global expansion is the priority for policymakers worldwide; steps are being taken in the right direction so far.
None of the five early warning indicators tracked by Western Asset point to an end of this expansion phase of the economy.
Market and Strategy Update
Our thought now is that the optimism for US growth is a bit overdone and pessimism around lethargic global growth rates has swung too far to the downside.
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.
While the Fed is expected to hike rates twice more this year, the potential removal of the word “accommodative” from its guidance would be a more notable development.
Key reasons why Western Asset maintains its long duration position
A timely reminder about what really drives fixed-income returns and where the opportunities lie. In short: never underestimate the power of income.
Third Quarter Outlook
Western Asset CIO Ken Leech surveys the state of global bond markets, sharing views on growth, inflation and the impact of trade and monetary policy.
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