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VIEWS FROM Loomis, Sayles & Company

CREDIT COMPASS:

Mapping the Markets in 2024

Investors seem to be betting this cycle of rate hikes has ended, and expectations for cuts are on the horizon. Where will the economy and markets go from here?

BY THE LOOMIS SAYLES MACRO STRATEGIES TEAM
What’s Next for the Credit Cycle? 


While we believe odds of a soft landing in the next six months are high, it’s still possible for the lagged effects of tighter monetary policy to drive the global economy into a downturn. Click through to learn more.

 

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We Asked Our Experts

Governments worldwide responded to the COVID-19 pandemic with massive fiscal stimulus; there’s speculation it could alter the way the cycle works. Not surprisingly, our investors have some different perspectives.

Is the cycle different this time?

 

Where do you think the US economy will be in six months? 

 

Data based on survey results of the nine Loomis Sayles experts featured on this page: Jack Celata, Senior Fixed Income Trader, Elisabeth Colleran, CFA, Portfolio Manager, Andrea DiCenso, Portfolio Manager, Brian Kennedy, Portfolio Manager, Peter Palfrey, CFA, Portfolio Manager, Preston Raymond, CFA, Senior Fixed Income Trader, Christopher Romanelli, CFA, Associate Portfolio Manager & Strategist, Patrick Savery, CFA, Senior Fixed Income Trader and Lynda Schweitzer, CFA, Portfolio Manager and Co-Head of Global Fixed Income.

Charts are shown for illustrative purposes only. Some or all of the information on these charts may be dated, and, therefore, should not be the basis to purchase or sell any securities. Information obtained from outside sources is believed to be correct, but Loomis Sayles cannot guarantee its accuracy. Any opinions or forecasts contained herein reflect the current subjective judgments and assumptions of the five investors surveyed, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.

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pETER pALFREY, CFA, PORTFOLIO MANAGER

This Cycle May be Different, but Not Necessarily Broken

"In a typical cycle, I think 525 basis points of Fed tightening would have been enough to arrest the level of activity that we saw in the economy."


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Taking Stock of the Credit Markets

After a year of surprising economic strength and major interest rate moves, growth and inflation appear to be softening. Our experts talk macro drivers, market technicals, and the corporate fundamentals affecting their allocations.

 

Anticipating More Volatility in the Treasury Market

Senior Fixed Income Trader Patrick Savery looks at the dynamics behind recent Treasury market moves.

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IG Market Technicals Looking Favorable in 2024

After the recent rallies in the investment grade market, where could it go from here? Preston Raymond, CFA, Senior Fixed Income Trader weighs in. 

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In the High Yield Market, Keeping an Eye on the Maturity Wall

Senior Fixed Income Trader Jack Celata discusses potential drivers of the high yield market in 2024.

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pETER pALFREY, CFA, PORTFOLIO MANAGER

Entering 2024 with an Up-in-Quality Approach

Preparing for slower growth late in the cycle. 

Are Conditions Constructive for Credit? 

We believe that lower growth and inflation can support credits, but selectivity is key at this phase of the cycle. Learn more from Brian Kennedy, Portfolio Manager and Chris Romanelli, CFA, Associate Portfolio Manager and Strategist.

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WE ASKED OUR EXPERTS

Where Do You Expect Inflation to Trend in the Next Six Months? 

Inflation is the bouncing ball investors have been following in recent years. Opinions vary, but our investors seem to agree it’s not likely to head higher in the first half of 2024.

 

Data based on survey results of the nine Loomis Sayles experts featured on this page.

Charts are shown for illustrative purposes only. Some or all of the information on these charts may be dated, and, therefore, should not be the basis to purchase or sell any securities. Information obtained from outside sources is believed to be correct, but Loomis Sayles cannot guarantee its accuracy. Any opinions or forecasts contained herein reflect the current subjective judgments and assumptions of the five investors surveyed, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.


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Global Perspectives

Policymakers and markets could be less synchronous going forward. What could this mean for the global opportunity set?

lynda schweitzer, cfa, PORTFOLIO MANAGER

Central Bank Dilemmas & Divergence

We think central banks could break out of policy lockstep in 2024, opening potential relative value opportunities.

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elisabeth colleran, cfa, PORTFOLIO MANAGER

EM Debt Flips the Script

EM has shown it's more than just an export or China story, in our view. We think this trend can continue in 2024. 

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WE ASKED OUR EXPERTS

Are You Bullish or Bearish on the Dollar? 

Most of our investors have a neutral-to-bearish view of the dollar over the next six months.

 

Data based on survey results of the nine Loomis Sayles experts featured on this page.

Charts are shown for illustrative purposes only. Some or all of the information on these charts may be dated, and, therefore, should not be the basis to purchase or sell any securities. Information obtained from outside sources is believed to be correct, but Loomis Sayles cannot guarantee its accuracy. Any opinions or forecasts contained herein reflect the current subjective judgments and assumptions of the five investors surveyed, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.

lynda schweitzer, cfa, PORTFOLIO MANAGER

What is the Dollar's Direction?

We believe that the path of the US dollar will depend very much on what's happening in the global economy, not just in the US.

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Investing with Eyes Wide Open

A sanguine outlook does not mean our experts are complacent about the risks.

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 ANDREA DICENSO, PORTFOLIO MANAGER

A Window of Opportunity & Risks Worth Watching

Risk assets could rally if Fed hikes are over, but we're monitoring US and global growth drivers. 

WE ASKED OUR EXPERTS

Indicators to Monitor

At this point in the cycle, if you could track only one indicator for clues about the economy's path forward, which would it be?

 

Data based on survey results of the nine Loomis Sayles experts featured on this page.

Charts are shown for illustrative purposes only. Some or all of the information on these charts may be dated, and, therefore, should not be the basis to purchase or sell any securities. Information obtained from outside sources is believed to be correct, but Loomis Sayles cannot guarantee its accuracy. Any opinions or forecasts contained herein reflect the current subjective judgments and assumptions of the five investors surveyed, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.


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The Tools Driving Our Insights

Get a glimpse into the proprietary tools that inform our views on credit.

A Big-Picture Understanding of Corporate Health 

The Loomis Sayles Corporate Health Index (CHIN) provides a view of credit markets, integrating the fundamental with the macro to help identify factors that others might be missing or ignoring. 

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Enabling Early Detection in the Credit Markets 

The Loomis Sayles Credit Analyst Diffusion Indices, or CANDIs, open up channels of communication to help us detect outliers and trends in the credit markets just as they emerge.


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Disclosure

Jack Celata, Elisabeth Colleran, Andrea DiCenso, Brian Kennedy, Peter Palfrey, Preston Raymond, Christopher Romanelli, Patrick Savery, and Lynda Schweitzer filmed their comments on 7 December 2023. 
All survey results are as of 7 December 2023 and are subject to change at any time without notice. Other industry analysts and investment personnel may have different views and opinions.

This marketing communication is provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein, reflect the subjective judgments and assumptions of the authors only, and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. Investment recommendations may be inconsistent with these opinions.

There is no assurance that developments will transpire as forecasted and actual results will be different. Data and analysis does not represent the actual, or expected future performance of any investment product. Information, including that obtained from outside sources, is believed to be correct, but we cannot guarantee its accuracy. This information is subject to change at any time without notice.

Commodity, interest and derivative trading involves substantial risk of loss. This is not an offer of, or a solicitation of an offer for, any investment strategy or product.

Any investment that has the possibility for profits also has the possibility of losses, including the loss of principal.

Markets are extremely fluid and change frequently.

Past market experience is no guarantee of future results.

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