Western Asset Managed Municipals Fund · NYSE:MMU
Western Asset Managed Municipals Fund — Special Webcast: 1Q26 Market Outlook (January 2026)
19 slides from Western Asset Managed Municipals Fund's conference presentation, Jan 8, 2026
Slide 1: 1Q26 Market Outlook
1Q26 Market Outlook January 8, 2026 Presented by: Michael Buchanan, CFA Catherine Matthews Chief Investment Officer Global Product Specialist Western Asset 1
Slide 2: Policy Rate Changes and 2025 Sector Returns
Policy Rate Changes and 2025 Sector Returns Policy Rates Year-to-Date Ending 31 Dec 25¹ 6 25 19.3 20 17.1 5 Market Implied 15 12.8 13.5 4 Percent 10 8.6 8.6 7.7 7.8 6.3 6.4 7.1 4.9 3 5 2.8 Percent 0 2 -1.5 -5 -6.3 1 -10 Germany Government UK IG Credit US IG Credit US High-Yield EMD USD Euro IG Credi
Slide 3: Global Macro Outlook
Global Macro Outlook Growth – Improvement expected ● Easier financial conditions and fiscal stimulus ● Global growth around 3% ● US growth to return to above trend at 2.0-2.5% Inflation - Subdued ● Global disinflation trend to continue ● US inflation to continue trending lower ● Inflationary forces
Slide 4: Inflation
Inflation Global inflation has moderated. US inflation to continue trending lower Global Inflation¹ Core Inflation Downtrend in Core Services, Shelter (6-mo annual rate) 8 12% 7 10% 6 8% 5 6% Year-over-Year (%) 4 4% 3 2% 2 0% 1 -2% 0 -4% 2018 2019 2020 2021 2022 2023 2024 2025 -1 2016 2017 2018 2019
Slide 5: US Labor Market
US Labor Market Longer-run history of the Unemployment Rate Civilian Unemployment Rate: 16 yr + (SA, %) 12% 11% 10% 9% 8% 7% 6% 5% 4.56% 4% 3% 2% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 NBER Recession Civilian
Slide 6: Eurozone
Eurozone Resilient growth, contained inflation and stable employment persist despite headwinds German fiscal loosening should start to gain traction. Other EU countries have little room for greater public spending Inflation close to 2% as labor costs ease and inflation expectations are anchored ECB
Slide 7: China
China Focus on reflation and improving domestic sentiment Policymakers’ focus will shift toward domestic challenges with external (primarily US) challenges deemed as manageable Persistent property market weakness with more developer headline distress expected Measures to improve the labor market and
Slide 8: Japan
Japan The gradual pace of BoJ policy rate hikes expected to continue Above trend growth in 2026 CPI inflation to moderate to around 2% YoY due to base effects (especially food prices) Extreme expansionary fiscal policies likely to be avoided. In contrast to the concerns on expansionary fiscal policy
Slide 9: Government vs. Household and Corporate Debt
Government vs. Household and Corporate Debt Development of Debt/GDP Ratios 180 160 140 Government 120 Percent 100 80 Corporate Household 60 40 20 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 Household Corporate Government Source: Federal Reserve, Macrobond. As of 31 Mar
Slide 10: Concerns on Valuations, Not on Fundamentals
Concerns on Valuations, Not on Fundamentals Risk markets have been resilient despite US tariffs Credit Spreads Are Close to Tights Estimated Next 12-Month OAS: 5-Year Range (High/Low/Current) S&P 500 Operating Margin 73 20.5% US IG Credit 67 151 77 EUR IG Corp* 75 234 276 19.5% US HY Corp 253 585 19
Slide 11: Corporate Bonds
Corporate Bonds Massive new issue IG supply expected in 2026 Tech/media Subsectors Drive Large Supply Growth to Fund AI Capex 2.5 2.03T 2.0 1.64T 1.51T 1.5 1.21T USD (trillions) 1.0 901M 683M 635M 500M 0.5 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 YTD 2026 F* Gro
Slide 12: M&A Activity Elevated Across Several IG Subsectors
M&A Activity Elevated Across Several IG Subsectors More cash (debt), more hostility, and higher breakup fees as M&A fervor surges Pipeline of Pending M&A Deals With IG Issuance Implications 800 700 600 500 USD (billions) 400 300 200 100 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: BofA Merri
Slide 13: High Yield
High Yield Leverage not concerning. Refinancing remains dominant theme Public vs Private Leverage 8.0x 7.0x LTM Debt/EBITDA Leverage (x) 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 Private
Slide 14: CMBS
CMBS Attractively Priced Commercial real estate property price growth is firmly positive & accelerating CMBS spreads remain wide to historical credit relationships and offer compelling value Month-over-Month Property Price Growth CMBS Spreads vs. Corporate Credit Spreads (Relative to 2019) 2.5% 4.5
Slide 15: Emerging Markets
Emerging Markets Policy easing to continue. Real yields remain high EM Real Yields 12 10 8 6 Percent 4 2 0 -2 -4 Sep 09 Sep 11 Sep 13 Sep 15 Sep 17 Sep 19 Sep 21 Sep 23 Sep 25 GBI-EM GD Real Yield Inflation (GBI-EM GD weighted) GBI-EM GD Nominal Yield Source: Macrobond. As of 30 Nov 25 The above ref
Slide 16: Key Takeaways
Key Takeaways Global Macro ● Growth improvement ● Global inflation has moderated ● US inflation to continue trending lower ● Central bank easing cycle near end ● Fiscal sustainability concerns remain Fixed Income Implications ● Front end yields mildly lower ● Yield curves generally steeper ● Pockets
Slide 17: Questions & Answers
Questions & Answers Q +A Western Asset 17
Slide 18: Western Asset, A Franklin Templeton Company
WESTERN ASSET A Franklin Templeton Company
Slide 19: Risk Disclosure
Risk Disclosure © Western Asset Management Company, LLC 2026. The information contained in these materials (“the materials”) is intended for the exclusive use of the designated recipient (“the recipient”). This information is proprietary and confidential and may contain commercially sensitive inform
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