Higher interest rates, a stronger US dollar, slowing economic growth and tighter monetary policy define the macro landscape. With a cautious view, Loomis, Sayles & Co.’s outlook offers key takeaways.


  • Recession Watch: While the Loomis Sayles team acknowledges growing odds of a US recession, they do not currently see one developing in the next six months. Given a typically long and variable lag in US Federal Reserve (Fed) policy, patience is required as the Fed raises rates in inflation-curbing efforts.
  • Macro Drivers: The team anticipates some downward revision to corporate profit estimates heading into 2023. They have revised global economic growth expectations lower in the past six months while revising central bank policy rates higher.
  • Credit: Despite challenges, higher global credit yields could present attractive income potential for patient investors willing to endure the volatility. Possible opportunities could include improving bank loan pricing, given low forecasts for defaults, a generally healthy corporate outlook, and resurging investor demand for discounted loans.
  • Government Debt & Policy: Foreseeing higher long-term yields and central bank policy rates, the team currently favors underweighting duration during the early innings of major central bank tightening cycles.
  • Equities: While solid bottom-up fundamentals may offer valuation support, until rate rising subsides, valuations are unlikely to expand. Further, volatility could persist given equities’ dismal first half results, inflation uncertainty, and the Fed’s willingness to continue tightening.
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