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Developing Custom IncomeTM that seeks to meet your needs is at the heart of what the Loomis Sayles CIS team does every day. Read their latest market insights and views below.
MONTHLY MARKET COMMENTS
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The Loomis Sayles macro strategies team base case remains "softer for longer" which would likely include a 20 to 25 basis point further rally in the 10-year Treasury yield before year end along with a moderate tightening in credit spreads. This base case view calls for a cooling US economy, but with overall growth remaining around the current trend helped by supply side dynamics such as an expanding labor force, resilient consumer spending, and an uptick in corporate profits. We believe the disinflation trend remains intact despite the stronger inflation prints earlier this year. The Fed has indicated they do not want to engineer a recession with overly restrictive policy. While the timing of Fed cuts is still uncertain, the market seems convinced that the next move for Fed funds is down.
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In the taxable bond space, markets generally posted modestly positive results for the month. The 10-year Treasury yield rallied 10 basis points in June to end at 4.50%. The BBG US Corporate Investment Grade Index and the BBG US Corporate High Yield Index also posted modestly positive returns of 0.6% and 0.9%, respectively, with the edge going to high yield primarily due to modest spread widening in the investment grade space. The current Loomis Sayles macro base case leaves room for further spread tightening in both investment grade and high yield.
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The Municipal (muni) market staged a rally in the month of June, with the Bloomberg Municipal Bond Index rallying 1.53%. Muni yields rallied more strongly in the longer end of the curve, which when combined with the selloff which occurred in the "belly" of the curve during May, left us with a muni yield curve which remains U-shaped but noticeably less so than it was at the beginning of the year or even a quarter ago. Munis generally underperformed Treasuries during the second quarter, with increased issuance being a key factor although investor demand remained strong as well. Overall, we believe the muni market remains fairly buoyant and should be considerably aided by the strong summer seasonals (reinvestment cashflows) that typically occur in July and August.
As of 30 June 2024.
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. 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.
This material is not intended to provide tax, legal, insurance, or investment advice. Please seek appropriate professional expertise for your needs.
Indices are unmanaged and do not incur fees. It is not possible to invest directly in an index.
Commodity, interest and derivative trading involves substantial risk of loss.
Any investment that has the possibility for profits also has the possibility of losses, including the loss of principal.
Market conditions are extremely fluid and change frequently.
Past performance is no guarantee of, and not necessarily indicative of, future results.
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