Global Growth Themes and Forecasts (Infographic)

Posted by Craig Burelle, Macro Strategies Research Analyst on Apr 24, 2017 2:30:00 PM

 A synchronized pickup in global economic activity has lifted the spirits of businesses, consumers and investors worldwide. Though many equity markets are near 52-week highs and credit spreads are near multi-year lows, corporate profits are now growing again in most countries. This profit rebound, along with our expectation that global growth will continue to strengthen, could help higher-yielding credit products generate excess returns over government bonds.

The US and UK are in later stages of expansion than Europe, but corporates in each region can still perform well if growth and business conditions continue to improve as we expect. Within EM, individual country performance will likely be driven by political and economic idiosyncratic developments, but broadly speaking, EM assets can benefit from the fundamental improvement we see globally.

Read on for a visual snapshot of our key themes across the globe.

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Topics: Macro Strategies

Turkish Referendum: Local Markets Rally, But For How Long?

Posted by Darcie Sunnerberg, Senior Sovereign Analyst on Apr 21, 2017 2:16:07 PM

So far, the market’s reaction to Turkey’s historic referendum on the adoption of a national presidential system on April 16 has been positive, with local bonds and the currency rallying. Despite a slim margin, this was a major win for President Erdoğan and the Justice and Development Party (AKP). The results lead to further consolidation of power under Erdoğan, who now controls the media (TV, radio and news), the police and the judicial system.

I anticipated this result would be a favorable outcome for Turkish lira (TRY) and the bond market for the short term as it would eliminate a key lingering political uncertainty. However,  longer term this result is likely to be quite negative for Turkey and there are still many questions to monitor.

In my view, the extent of the current rally will depend on the outcome of the following factors/risks: Read More

Topics: Macro Strategies, Sovereign Research

Dutch Election Results: What Do They Mean for France?

Posted by Laura Sarlo, Senior Sovereign Analyst on Mar 21, 2017 1:11:32 PM

Global markets breathed a collective sigh of relief last week when it became clear that Geert Wilders’ anti-European Party for Freedom (PVV) did not win the most votes in the March 15 Dutch election.

But did populism lose? Is the populist wave over? Not so fast. Prime Minister Mark Rutte adopted some populist and nationalist rhetoric during the campaign –remember that he ran ads this past January in all major Dutch papers telling immigrants to “act normal or leave.”

 

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Topics: Macro Strategies, Sovereign Research

The Donald and the Dollar

Posted by Laura Sarlo, Senior Sovereign Analyst on Mar 8, 2017 9:45:00 AM

Posted byLaura Sarlo, Senior Sovereign Analyst and Tom Fahey, Senior Global Macro Strategist

From Election Day in November through the end of 2016, financial markets embraced the “Trump Trade,” pricing higher equities, higher interest rates and a stronger US dollar.

 So far this year, two legs of the Trump Trade remain intact:

  • US equities have continued to march higher as optimism grows for improving corporate profitability.
  • Bond yields have retraced some of the post-November gains, but at 2.49% the current US 10-year Treasury yield is still more than 60 basis points higher than the 1.8% seen just before the election.

However, the trade weighted dollar has dropped 4%, losing 5-7% against many emerging market and commodity-related currencies. We view the recent depreciation as a correction in the dollar’s primary trend toward appreciation. The dollar is likely to remain supported by easier fiscal policy, tighter monetary policy and the ongoing economic expansion. Most notably, we expect tax policy decisions published over the next month will be the major catalyst for the dollar for 2017.

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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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