The May Employment Report from the Bureau of Labor Statistics (BLS) sent a contradictory message to markets, leading analysts to puzzle about what is going on. The Establishment Survey, which surveys businesses, nonprofits and government agencies about their payrolls, gave very upbeat data for May. However, the Household Survey, which surveys households about the employment status of their members, provided grim estimates for employment, reporting the highest unemployment rate in more than two years. The contradiction is no small issue. Financial markets pay close attention to the Employment R ..read more

The UK heads to the polls on 4 July, with predictions pointing to a sweeping Labour victory. This would mark the first Conservative-to-Labour transition in 27 years. Major political shifts in the UK have historically been followed by profound economic changes, and this occasion might be no different. Rachel Reeves, who will become Chancellor of the Exchequer in a Labour government, has outlined a comprehensive framework for Labour’s economic policy, focusing on addressing Britain’s supply-side crisis and drawing parallels to current US strategic economic policies. Labour aims to play a long ga ..read more

The disinflation trend appears intact in the US and in the euro area. While economic growth in these regions could ease, we believe solid labor markets should support consumption. Markets are poised for rate cuts. The timing of the central banks’ moves remains uncertain and, very possibly, a potential source of volatility. In China, very different variables are at play. A protracted downturn in the property market and subdued consumer spending are impeding the economy's recovery. Despite positive data surprises in exports and Purchasing Manager Indexes, insufficient domestic demand still remai ..read more

The European Central Bank has signaled that it will cut interest rates at its meeting this week, potentially starting a proper cutting cycle ahead of the Federal Reserve for the first time since the ECB’s inception in 1998. The ECB’s messaging generated some market excitement about a widening interest rate differential and its impact on currency movements. If the ECB cuts rates while the Fed holds steady, could it finally drive euro weakness after 18 months of range-bound trading? We don’t think it’ll be quite that simple. While rate differentials matter, we see a couple of factors that could ..read more

1. There have been many headlines over the past few months about booming demand and insatiable appetite for private fixed income. What’s driving that demand, and is it sustainable? The irony of these headlines is that, for decades, private fixed income[i] was a relatively sleepy corner of the financial market. Insurance companies dominated the buyer base. Private fixed income didn’t really start to catch on outside of the insurance industry until after the global financial crisis, when massive new regulations caused traditional bank lenders to retreat from the markets. Demand for debt was stil ..read more

Corporate health is looking brighter and brighter, according to Loomis Sayles’ Credit Analyst Diffusion Indices (CANDIs).[i] For the first time in several quarters, our analysts expect the aggregated corporate credit outlook to trend higher. Together with continued positive trends in other key measures like profit margins and pricing power, the March CANDIs suggest there is still gas left in the tank to fuel further earnings expansion, and a broad-based economic downturn has likely been pushed out on the horizon.       About the CANDIs Once a quarter, we survey Loomis Sayle ..read more

The 2-year Treasury yield shot up 23 basis points April 10 after another higher-than-expected inflation print. An increase of that magnitude has only happened 13 times since the year 2000–a period of nearly 9,000 days. The Fed’s forward path is hardly certain, but for now, the market has ratcheted down and pushed out rate cut expectations. We think it is an opportune time to consider cash flow generating strategies that can capitalize on the currently higher yield levels to address near-term liquidity needs. Nobody Wants to be a Forced Seller A cash flow generating portfolio can look very simi ..read more

It has been four years since the World Health Organization declared COVID-19 a pandemic and the world shut down. The spring of 2020 was a period of incredible uncertainty for hospitals across the United States as they scrambled to adapt to new protocols and immense operating and financial pressures while treating the first of many waves of COVID patients. It was the start of a turbulent period for nonprofit hospitals, and while the sector is more stable today, we think some providers have emerged in a much stronger position than others. Read on for the lessons we’ve learned from the previous f ..read more

US rates grinded higher at the beginning of 2024 as the economy continued to prove resilient. Stronger-than-expected economic data, plus a Consumer Price Index (CPI) surprise, could point to a higher-for-longer outcome, in our view. The market’s anticipation for rate cuts has moderated with recent data and Federal Reserve (Fed) commentary. While Fed Chair Jerome Powell signaled that progress is being made on inflation and rate cuts are next, he did not endorse March as the date for the first cut. Rather, he emphasized that the committee needs to see additional progress—even though three- and s ..read more

Despite macro headwinds in 2023, emerging market (EM) debt performance was strong. How do you explain it?                                                                                                    EM asset classes did end up having a good year in 2023 in general. I would even suggest that during the year, there was a noticeable shift away f ..read more