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VIEWS FROM Loomis, Sayles & Company

When Will Credit Get Its Due?

Higher yields could mean a better starting point. But there are plenty of economic and geopolitical wild cards on the table. Learn how inflation, defaults and other drivers could shape credit opportunities and risks. 

 

No Tipping Point Yet

Fundamental and technical factors could buoy high yield, investment grade and emerging markets near term. 

 

Why Have High Yield Spreads Been so Tight?

Elaine Stokes shares why she thinks spreads have held in despite rising recession risks.


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Healthy Balance Sheets in the Investment Grade Market

Michael Gladchun discusses how limited debt growth and high interest coverage ratios have helped corporate health in the investment grade market. 

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Emerging Markets: Is the Worst Behind Us?

Andrea DiCenso examines the nuances behind emerging market fixed income performance in the past year.

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Inflation: Sticky Does Not Mean Stuck

The outlook for rates, yields and spreads from here depends a lot on the inflation outlook.
Not surprisingly, our investors have some different perspectives.*

Do you think Core CPI will fall below
3% by the end of 2023?

 

Do you think the US will return to
lowflation in the next 10-15 years?

 

Data Source: National Bureau of Statistics, as of October 2022. 

*Survey results based on the current views of five Loomis Sayles investors: Elisabeth Colleran, Portfolio Manager, Emerging Markets Debt, Andrea DiCenso, Portfolio Manager, Alpha Strategies, Michael Gladchun, Senior Strategist, Core Plus Fixed Income, David Rolley, Portfolio Manager, Global Fixed Income and Elaine Stokes, Portfolio Manager, Full Discretion.

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.

Team Disinflation or Team Sticky Inflation? Our Investors Weigh In.

Inflation remains elevated. Our investors share whether they think it could stay that way.

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The EM Inflation Story:
A Surprisingly Effective Response

EM central banks’ response to inflation was swift and strong, and appears to have helped these countries stay ahead of the Fed.

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Digging into Defaults

We’re cautiously optimistic that this default cycle will be relatively benign.
With the exception of some outliers, our research generally supports that thesis.

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Emerging Market Defaults: Headlines and Headwinds Set to Subside

After a spike in emerging market defaults in 2022, Andrea DiCenso sees opportunity for default rates to normalize in 2023.

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Bottom-Up Research Supports a More Benign Default Cycle 

Elaine Stokes shares a research-based perspective on high yield defaults.

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Watch for Surprises in Private Markets

Publicly traded companies appear to be on strong footing, but David Rolley thinks the outlook is less clear in the private markets.

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No Reason for Alarm in the Bank Loan Space

Cheryl Stober looks at the drivers of loan defaults and why she expects a mild default rate at this point in the cycle.

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Volatility Can Bring Opportunity

Volatility is hard to stomach. But as fixed income investors in a supply-constrained market, it can help provide attractive entry points for long-term investors. From the loan market to EM markets, here are some potential
opportunities we’re excited about. 

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Buying bonds, I think we need to be early.

Elaine Stokes explains why she favors edging into bond markets early to prepare for dislocations. 

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The Building Blocks for a Dollar Bear Market

Andrea DiCenso shares the key development she needs to step into the non-dollar trade.

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The Ripple Effects from China’s Reopening 

China’s reopening has the potential to be a rising tide that lifts other boats. 

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In the Loan Market, the Risk Bet is a Key Bet

History suggests the loan market has potential for a rebound.  

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Investing with Eyes Wide Open

China, Russia, Ukraine, and the effects of tighter monetary policy.
While some of these topics may fade from the headlines, they’ll remain top of mind as we think about key risks in 2023.

The Implications of Tighter Monetary Policy

Michael Gladchun is watching for a lag effect from rapidly rising rates.

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Major Global Risks Fall into Two Categories

David Rolley discusses systematic geopolitical and economic risks that could reverberate around the world.

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Don’t Sleep on Russia-Ukraine War Risk

The Russia-Ukraine war, China, and emerging market supply are risks that Elisabeth Colleran thinks may be underappreciated by the markets.

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Shifting the Focus from Interest Rate Risk to Credit Risk

As the potential for a recession increases, Elaine Stokes believes credit risk is something investors should be paying attention to.

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Preparing for Recession and SOFR

In the loan market, recession risk and the transition from LIBOR to SOFR are top of mind.

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Disclosure

Andrea DiCenso, Michael Gladchun and Elaine Stokes filmed their comments on 30 November 2022. David Rolley filmed on 13 December 2022. Elisabeth Colleran and Cheryl Stober filmed on 14 December 2022.

All other views are as of  31 January 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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