Macro Perspective

Following the sharpest monthly decline in risk assets on record in March, which occurred due to the unexpected coronavirus/COVID-19 pandemic and oil price shock, Western Asset’s base case outlook is for a longer, U-shaped global economic recovery. This is premised on the view that near-term growth will be severely impacted, but that this shortfall will prove to be largely transitory as policymakers push to resuscitate economic activity. On this front, significant central bank policy easing, extensive liquidity provisions and enhanced fiscal stimulus are already underway. Together, they should help temper the negative impact of restrictive social distancing policies on global economies and enable markets to function more smoothly. As the actual timing of any eventual recovery will be tied to the length and severity of the pandemic—a key uncertainty at this point—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 outlook and describe where we see value across global fixed-income markets.

Global Corporate Credit Sector Views