Western Asset Core Plus Bond Fund Class R · NASDAQ:WAPRX
Western Asset Core Plus Bond Fund Class R — Western Asset Management Company — Investor Presentation (July 2024)
17 slides from Western Asset Core Plus Bond Fund Class R's investor presentation, Jul 25, 2024
Slide 1: Macro Opportunities Strategy Update: Navigating Rate Cuts and Election Volatility
Macro Opportunities Strategy Update: Navigating Rate Cuts and Election Volatility July 25, 2024 Prashant Chandran Elliott Neumayer Portfolio Manager Product Specialist 1
Slide 2: Macro Opportunities: Why Now?
Macro Opportunities Why Now? We believe that the Macro Opportunities marketplace is favorably positioned to realize attractive absolute and excess returns in the year ahead. Over time, as the backdrop of receding inflation continues, short rates should eventually be reduced. The prospect of lowe
Slide 3: 2024 Global Outlook
2024 Global Outlook Disinflation ongoing but uneven Central banks will ease policy to normalize real interest rates Economy has remained resilient, but is set to slow Fixed-income outlook US growth will slow but should avoid recession Global growth has downshifted and China is now a source of de
Slide 4: Global Disinflation Is Broad-Based and Ongoing
Global Disinflation Is Broad-Based and Ongoing Advanced Economies: Composite CPI Percent Change Year over Year, Seasonally Adjusted, 2015=100 Eurozone Inflation 12 10 10 8 8 6 Percent 6 Percent 4 4 2 2 0 0 -2 -2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2005 2007 2009 2011 2013 201
Slide 5: US Inflation: More Disinflation Ahead
US Inflation: More Disinflation Ahead CPI housing inflation measures still elevated relative to surveys; goods prices can stay in deflation Core PCE Inflation Rent Inflation 12m %ch, ar 6m %ch, ar 3m %ch, ar 18% 8% 16% BLS: Rent of Primary Residence 14% %ch, year-over-year Zillow: Observed Rent Inde
Slide 6: Labor Market May Have Fully Normalized
Labor Market May Have Fully Normalized Wage Growth Job Openings, Quits, Hiring Rates All Near Pre-Pandemic Ave Hourly Earnings (3m %ch) ECI (quarterly %ch) Levels as Percent of Total Employment 10% 9% 7% Job Openings total Quits tot Hiring Rate tot 8% 6% Quits and Hiring Rate 8% Job Openings Rate 7%
Slide 7: Consumer Spending Continues to Downshift
Consumer Spending Continues to Downshift Control Retail Sales Savings Rate 16% 35 Savings Rate Year-over- 30 12% Average 2015-2019 Year 25 8% 20 4% 15 10 0% 3-Month Moving Average 5 -4% Annualized 0 2018 2019 2020 2021 2022 2023 2024 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: US Censu
Slide 8: Interest Rates Remain Elevated
Interest Rates Remain Elevated TIPS Real Yield History 10- Year Real Yields 4.0 3.0 5-yr TIPS 10-yr TIPS 3.0 30-yr TIPS 2.0 US 2.0 1.0 Percent 0.0 Percent 1.0 Germany 0.0 -1.0 -1.0 -2.0 UK -2.0 -3.0 -3.0 -4.0 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2012 2014 2016 2018 2020 2022 2024 S
Slide 9: Rest of World
Rest of World Europe: Low to stagnant growth, inflation closing in on target with wages moderating ECB: Two more 25 bp cuts expected this year for a total of three in 2024 UK: Inflation at target, wage growth slowing and unemployment rate above pre-pandemic, continued depressed growth BoE: Shoul
Slide 10: The USD and Commodities: Key Emerging Market Drivers
The USD and Commodities: Key Emerging Market Drivers EM local markets have underperformed previous cycles— EM central banks are further into the easing cycle than DM US exceptionalism has weighed on returns A Fed pause coupled with moderate economic growth bodes well for EM USD weakness going
Slide 11: Investment-Grade and High-Yield Credit
Investment-Grade and High-Yield Credit US investment-grade credit at +87 OAS is “richly valued,” but cash flow and debt metrics are healthy Foreign demand remains elevated, has helped absorb record net supply High-yield default rate off record lows, but debt maturity wall meaningful only in 20
Slide 12: Sector Exposure
Sector Exposure Macro Opportunities June 30, 2024 Major Key Rate Duration (yrs) QoQ Change Sector Exposure (%) QoQ Change Currency (%) QoQ Change 6 Month US -2.2 0.5 Peripheral Europe -4.1 3.0 United States 83.8 3.9 Municipals 0.2 0.1 Mexico 9.2 -0.3 2 Year US 7.5 1.5 MBS/ABS 19.6 6.7 Japan 7.6 1.1
Slide 13: Historical Contribution to Risk
Historical Contribution to Risk Macro Opportunities Ex-Ante Volatility April 30, 2013 – June 30, 2024 Historical Contribution to Risk Duration/Curve Foreign Exchange Spread Credit And EMG Idiosyncratic Credit Default Inflation-Linked Spread Gov-Related Swap Spreads 120 100 80 Share of Ex-Ante Volati
Slide 14: Macro Opportunities: Why Now?
Macro Opportunities Why Now? We believe that the Macro Opportunities marketplace is favorably positioned to realize attractive absolute and excess returns in the year ahead. Over time, as the backdrop of receding inflation continues, short rates should eventually be reduced. The prospect of lowe
Slide 15: Questions & Answers
Questions & Answers QA 15 a aN “AWESTERNASSET
Slide 16: Thank you.
Thank you. “WESTERN ASSET
Slide 17: Risk Disclosure
Risk Disclosure © Western Asset Management Company, LLC 2024. 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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