Macro Perspective

Western Asset’s base case outlook is for an elongated, U-shaped global economic recovery. While coronavirus-related setbacks have meaningfully reduced global growth, an incipient recovery appears to be gaining traction. We expect the battle against COVID-19 will take time; however, we are encouraged by signs of progress in the global race for a vaccine and the decline in global mortality rates, which suggest that renewed lockdowns are unlikely. Forceful policy action to date has buoyed global economic activity and restored market functioning. We expect central banks to remain extraordinarily accommodative, especially in light of subdued global inflation pressures, and to remain so until the recovery clearly begins. Given that the timing and slope of an eventual recovery are the greatest uncertainties, our portfolios are positioned to withstand further market volatility, yet remain flexible enough to capture exceptional value opportunities as they appear. Here, we provide a summary of the key drivers behind our global credit outlook and details about where we see value across credit markets.

Global Corporate Credit Sector Views