Consensus expectations for global growth have been revised lower and fiscal stimulus in the US could fade in the coming quarters. We view this period as a soft patch in a continued expansion that likely leads growth back toward levels consistent with the global economy’s long-run potential.
Sector teams are a critical part of the investment process at Loomis Sayles. They bring together traders, analysts, strategists and portfolio managers, each with expertise in specific financial market sectors.
Our 2019 Outlook from the Loomis Sayles Sector Teams shares insights and opportunities across every sector, from bank loans to currencies.
How Loomis Sayles investment teams are preparing for the year ahead.
Global economic activity appears to be slowing down. But slowing down and tipping into recession are two different things. Isee limited evidence to suggest the global or US economy is heading toward recession in the near term. But investors should be ready for higher volatility and modest total returns as we transition toward slower growth in this mature phase of the expansion.
Modest total returns and above-average volatility may define the risk asset landscape in 2019 as economic and corporate earnings growth slow.
US bank shares are in a bear market. The KBW Bank Index fell 20% in 2018. That’s much worse than the overall stock market, which fell 6% in the same period. Ten years after the global financial crisis of 2007-2008, many investors are worried that this economic upturn can’t last much longer. Anxiety about the risk of a recession is high.
Wary investor sentiment, seasonal trading activity in loans, and a big institutional seller have combined to drive down loan prices over the last few weeks. The press has been all over this, using covenant-lite and loan-only narratives with which we disagree. We don’t see a sensational story here. The recent decline was mostly due to technical factors amplifying global macroeconomic worries.
To wrap up 2018, we took a look back at the year’s most popular blog posts. Not surprisingly, they reflect some major themes that emerged during the year – rising Treasury yields, volatility and US politics. In case you missed them, here are five of our favorites, listed in order of popularity.
The Federal Reserve Open Market Committee is set to release its press statement on December 19. I expect the FOMC to increase policy rates by 25 basis points. The new range for the federal funds rate would be 2.25% to 2.50%.
The national midterm elections are today. As of yesterday morning, Nate Silver’s FiveThirtyEight website is giving the Democrats an 85.6% chance of taking the House of Representatives and the Republicans an 85.6% chance of keeping the Senate. This forecast should be no surprise; the president’s party almost always loses House seats in the first midterm election...
The federal deficit hit $779 billion in fiscal year 2018. This was the highest level since the $1.09 trillion deficit of FY 2012. Many pundits point to the tax cuts as the driver, but that tells only a part of the story.
Most major economies appear to be gradually advancing through the credit cycle, with most countries in recovery or expansion. We expect global growth to remain near current levels, but we are mindful of key risks. Read on for a visual snapshot of growth themes across the globe.
The US and China look set to propel global growth forward in the quarters ahead, supported by stable growth and moderate inflation. Here's a snapshot of my asset class outlook.
Growth and inflation within the world’s largest economies should remain near current levels, keeping the positive operating environment for companies intact.
As we learned in the childhood fable The Tortoise and the Hare, the tortoise’s steady pace puts him ahead of the hare. We like to think of senior loans as the tortoise of the investment universe. Here are some highlights about this slow and steady asset class and how it may help your investment portfolio.
Loomis Sayles' Cheryl Stober thinks of senior loans as the tortoise of the investment universe. Read her recent blog for more on this slow and steady asset class and how it may help your investment portfolio.
Fans of the “Fast & Furious” movies know the game of chicken. Two cars race toward each other, each driver waiting for the other to swerve out of the way. If neither swerves, the cars collide head-on. This game has been playing out in Europe as the UK and Italian governments each face off with the EU.
The Loomis Sayles Multi-Asset Income Team shares their approach to creating sustainable, consistent income through any market environment.
I believe US dollar strength is likely to persist, largely driven by global growth, monetary policy and trade developments. However, there are a number of additional factors at play. Here is a checklist of dollar drivers and how I expect each factor to influence the currency.
The crisis in Turkey is rapidly evolving, with new developments emerging every day. Turkish assets sold off significantly from August 8 to 13, before experiencing a short covering rally beginning on August 14. Perhaps the selloff was overdone, or perhaps not. Either way, the trajectory for Turkey has not changed.
There’s a tug of war brewing between housing costs and consumer budgets in the US. Single-family home prices have risen 6% a year or more since 2011, and supply/demand forces point to further increases. But consumer budgets have limits. Some buyers are now spending around half of their income on housing.
Momentum in the US economy relative to the rest of the world should keep the Fed on its current path to higher short-term interest rates.
While the recent backup in 10-year Treasury yields may look stark on short-term charts (namely 1-year and 2-year charts), the move we’ve seen in rates thus far is actually very normal considering where we are in the economic cycle.
Christopher Romanelli examines the factors that could support the high yield market in a world of tighter monetary policy.
Is a regime shift in monetary policy imminent? One might think so looking at the yield curve flattening trend—the 5-year and 30-year Treasury yield spread has narrowed 75 basis points (bps) since September 2017 and appears to be on track to flatten entirely.
It may be chilly outside this spring, but the US economy is currently running hot. Two data releases this week indicate that the economy is hot. However, I caution that these days, hot is not what it used to be.
Don't let increased volatility throw you off track. We believe key drivers of growth around the world remain in place. Although the pace of global acceleration has slowed a bit recently, economic indicators continue to signal levels of activity consistent with expansion.
Subprime. It’s the eight-letter word that turned into something of a four-letter word during the 2008 global financial crisis. Even now, ten years later, that stink has not washed off. Investors have been eyeing subprime auto asset-backed securities (ABS) for signs of trouble, wondering if growing auto debt levels, rising interest rates, deteriorating performance and changing issuer composition could mean the next subprime storm is brewing.
The LOIS spread is at its widest point since the financial crisis. It may be unnerving, but we don't think it's a sign of trouble in the financial system.
We all knew volatility couldn’t stay low forever, even with solid global growth and low inflation. Rising volatility is common in the late stage of the economic cycle, and negative headlines have been dominating market sentiment.
While the markets in the first quarter may have been roiled by a former antagonist—volatility—the outlook for the rest of the year looks solid. Global growth is projected to continue, fortified by strong corporate earnings estimates—particularly for US companies, where tax cuts should boost bottom lines.
I noticed an interesting result in the Conference Board’s most recent Index of Consumer Confidence in March. The percentage of survey respondents describing business conditions as "good" reached its highest point since 2000. Great news, right?
We expect the upward trend in rates to continue, but at a fairly slow pace that shouldn’t disrupt risk assets.
Many of India’s state-owned banks are in trouble. This month the government is injecting $13 billion to help these banks offload non-performing loans. By 2020, the total cost of injections is projected to rise to $21 billion, about 1.3% of GDP.
It’s no secret that the retail sector has been under a lot of pressure. Retailers are facing significant headwinds, including high competition, increasing promotional costs and declining mall traffic. So is retail exposure a problem for CMBS? The short answer is yes. But it’s complicated.
FX trading involves infinite complexities, opportunities and risks. Loomis Sayles breaks down some of the concepts and describes the firm's approach.
Cracks are starting to appear in five highly leveraged economies: Canada, Australia, Norway, Sweden and New Zealand. For several years following the global financial crisis, these five countries all shared a common theme—a multi-year housing boom, fueled by low interest rates, which resulted in very elevated levels of household debt.
The Year of the Dog may not be known for being the most auspicious, but for China’s local, renminbi-denominated bond market it may prove momentous. I see two likely drivers of increased foreign investment as the government continues to lower the barriers to entry.
We expect a constructive global growth environment to persist into 2018. While there is potential for a temporary slowdown, a significant deviation from broadly positive trends across risk asset markets seems unlikely. How might this differ across key regions? Read on for a visual snapshot of themes across the globe.
For many investors, it’s pretty unsettling to hear that the market’s “fear gauge” is suddenly on a tear. But that’s what happened over the past week. That fear gauge, formally known as the VIX, rose almost 300% in three trading days, signaling an end to the market calm that dominated in 2017.
Volatility returned in a big way earlier this week. Over the past few trading sessions, equity market volatility as measured by the VIX more than doubled, and global equities from Europe to the Asia Pacific region suffered steep declines. What happened?
Earlier this month, the Loomis Sayles sector teams published their 2018 outlook. Here's a snapshot of what our bank loans sector team is anticipating this year.
NAFTA is facing an existential threat. The US and its global trading partners could be entering uncharted territory.
Earlier this month, the Loomis Sayles sector teams published their 2018 outlook. Here's a snapshot of what our investment grade and high yield sector teams are anticipating this year.
Investing in the information age can be a noisy endeavor–investors are barraged with new information minute by minute. At Loomis Sayles, our investors count on sector teams as one way to cut through the noise.
What’s ahead for major market sectors in 2018? Experts from research, trading and portfolio management at Loomis Sayles weigh in.
This year saw a lot of buzz about the retail apocalypse as a record number of retailers filed for bankruptcy, participated in distressed debt exchanges or simply shuttered thousands of stores. Going into November, expectations for traditional retailers were pretty low and retail fear was at an all-time high.