Global Growth Themes and Forecast (Infographic)

Posted by James Balfour, Senior Global Economist on Oct 20, 2016 5:08:56 PM

With global savings and investment having peaked recently, we remain in a demand deficient world, looking for the next region, country or sector to increase borrowing and spending. Until then, demand will likely fall short, and we’ll muddle through.  

In this environment, markets have performed well, maybe too well, driven by financial repression and the thirst for yield. We’re in a “lower for longer” bond yield environment as inflation in advanced economies decelerates and major central banks—the Bank of England, European Central Bank and Bank of Japan—pursue quantitative easing (QE). The search for yield has pushed investment flows toward riskier assets such as high yield and emerging markets (EM). Spreads have tightened and stocks have done well. But we fear markets may be disappointed if we miss 3% global GDP growth expectations and S&P 500® Index operating profits rebounding by 10% to 13% in 2017.

We need economic execution and an exit from the profits recession to justify the recent rally in risk assets. If we’re right, and EM growth is bottoming while developed market growth is steady, then market valuations should eventually line up.

Every quarter, we update our forecast map. Read on for our global highlights:  Read More

Topics: Macro Strategies

BB-Rated Bank Loans Can Make It Better: Reducing Volatility, Drawdown Risk

Posted by Cheryl P. Stober, Product Manager on Oct 6, 2016 9:08:55 AM

Our bank loan team has long believed that BB-rated bank loans can be very attractive to asset allocators who wish to reduce volatility, improve risk/return trade-offs, and ameliorate drawdown in high risk categories such as high yield and equities. One of the main benefits of investing in higher-rated loans is a historically higher return per unit of risk, which many investors are seeking.

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Topics: Bank Loans

China: Rising Risks Posed by Shadow Banking

Posted by Celeste Tay, Senior Sovereign Analyst on Sep 30, 2016 2:01:54 PM

Non-bank financial institutions (NBFIs), which typically operate with less regulatory oversight compared to banks, have existed in China for decades. Recently, we’ve witnessed another boom in wealth-management products (WMPs) originated by both banks and these NBFIs. These activities are referred to as China’s shadow bank. Traditionally sold to retail investors, these WMPs are increasingly bought by banks and even repackaged into other WMPs. 

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FOMC September Decision: Setting Up a Hike

Posted by Brian Horrigan, Chief Economist on Sep 22, 2016 11:05:49 AM

To almost no one’s surprise, the Federal Reserve’s Federal Open Market Committee (FOMC) changed no policy rates and it kept its policy concerning its balance sheet unchanged this week. 

Not everyone was pleased.  There were three dissents, all by bank presidents who wanted a 25 basis point hike:  Esther George, Loretta Mester and Eric Rosengren.  Rosengren was a bit of surprise since he used to be thought of as “dovish.”  It was the largest number of dissents in two years.  The degree of dissent should push the FOMC to act soon.

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Topics: Macro Strategies

Loomis Sayles analysts are career professionals who offer deep knowledge and experience in a diversity of global asset classes and market sectors. These dedicated experts provide the insight essential to supporting our portfolio management teams across a wide range of investment strategies.


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