Western Asset Managed Municipals Fund · NYSE:MMU
Western Asset Managed Municipals Fund — Investor Presentation (January 2025)
24 slides from Western Asset Managed Municipals Fund's investor presentation, Jan 8, 2025
Slide 1: 1Q25 Market & Strategy Update
1Q25 Market & Strategy Update January 8, 2025 Michael Buchanan Catherine Matthews Chief Investment Officer Global Product Specialist 1
Slide 2: 2024 Global Fixed-Income Returns
2024 Global Fixed-Income Returns Government Bonds 7-10 Year Gov’t Bond 30.0 17.3 Total Return (%) 20.0 9.8 4.3 5.6 8.1 10.0 0.1 1.0 1.4 1.7 0.0 -10.0 -3.0 -2.1 -0.7 -20.0 -12.2 Brazil UK Japan US Germany Poland Mexico Australia Indonesia Italy China India South Africa Source: Bloomberg, J.P. Morgan.
Slide 3: Global Outlook
Global Outlook Global growth is moderating Inflation is gradually moving toward central bank targets Services inflation remains sticky Policy rates will trend lower US growth will continue to outpace other developed markets, supported by solid real income growth US policy initiatives may lead to bou
Slide 4: Global Disinflation Is Broad-Based and Ongoing
Global Disinflation Is Broad-Based and Ongoing Services inflation remains sticky but continues to trend lower Global Inflation¹ 8% Headline Core Core Goods Services 7% 6% 5% Year-over-Year 4% 3% 2% 1% 0% -1% 2016 2018 2020 2022 2024 Source: Citigroup, Haver Analytics. As of 30 Nov 24 ¹Headline and c
Slide 5: US Inflation
US Inflation The path to 2% core inflation has been slow and arduous Core PCE 6% Core PCE YoY Fed Core PCE Target 5% 4% 3% 2% 1% 0% 2019 2020 2021 2022 2023 2024 Source: Haver Analytics. As of 30 Nov 24 The above reflects current opinions of Western Asset, which are subject to change with market con
Slide 6: US Labor Market
US Labor Market Labor market continues to rebalance across a broad swathe of measures Job Openings, Quits Rate and Hiring Rate have all declined to at or below pre-COVID levels Unemployment Rate & Initial Claims Job Openings, Quits, Hiring Rates All Near or Below for Unemployment Insurance Pre-Pan
Slide 7: Global Economic Projections
Global Economic Projections Continued US resilience GDP (% change) 2024 2025 Forecast 6 5 4.8 4.5 4 Percent 3 2.8 2.2 2 1.8 1.8 1.2 1 0.8 0 Advanced Economies US Eurozone China Source: International Monetary Fund. As of 30 Nov 24 The above reflects current opinions of Western Asset, which are subjec
Slide 8: US Consumption
US Consumption Growth outlook underpinned by strong personal income growth Real incomes have started to improve after early 2024 deceleration Wage compensation has picked up, but productivity has improved US Revolving Consumer Credit as a Percent of Personal Disposable Income 10 9 8 7 6 Percent
Slide 9: Volatility Will Create Opportunities in 2025
Volatility Will Create Opportunities in 2025 Spread sector volatility remains subdued while interest rate volatility remains elevated MOVE Index 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Bloomberg. As of 31 Dec 24 Credit Spread Volatility 100 80 60 40 20 0 2015
Slide 10: US Trade Policy and Implications
US Trade Policy and Implications Protectionism on the Rise US Customs Duty Revenues 125 Even before Trump 2.0, US trade policy has become 115 increasingly protectionist Obama Trump Biden Unlike fiscal policy, the Executive Branch can single-handedly 105 drive trade policy 95 Trump plans a blunt,
Slide 11: Fiscal Concerns Continue to Weigh on the Market
Fiscal Concerns Continue to Weigh on the Market Net Interest Cost & Weighted Average Federal Tax Revenues & Net Interest, Social Security, Cost of Marketable Debt Medicare, Defense, Health & Veterans Outlays 19% 10.0% 6.0 Net Interest Cost, % of Tax Revenues (left) 9.0% 17% 5.0 8.0% 12-Month Rolling
Slide 12: US Interest Rates
US Interest Rates The path for short rates is more reliable than the path for longer rates Less than two Fed rate cuts are currently priced in for 2025 Resilient US growth, 100 bps of Fed rate cuts and prospective new US administration policy have removed the inversion of the yield curve Fed Fun
Slide 13: Europe
Europe Lackluster growth with inflation near target Growth: Modest expansion at best Inflation: Lower services inflation key to ECB pace going forward ECB: Policy rate expected to be at 1.75% by the end 2025 Policy HICP* GDP 1999 to Current 1.50 2.10 1.40 Current 3.00 2.20 0.95 Source: ECB, Ha
Slide 14: United Kingdom
United Kingdom “A gradual approach to removing policy restraint remains appropriate” – Bank of England, December 2024 BoE monitoring budget impact Growth has been below forecasts Businesses expect to reduce hiring and wages, and raise prices modestly BoE likely to cut by more than the market
Slide 15: Japan
Japan Higher wages along with higher inflation forecasts strongly suggest Japanese yields need to rise Policy Rate 6% The Japanese economy is expected to recover, driven by CPI excl. fresh food and private consumption and business investments 4% consumption tax effects Policy rate Inflation has
Slide 16: China
China Endogenous structural challenges & exogenous headwinds Stimulus measures may be insufficient to bolster business confidence Heightened global pushback on Chinese industrial policies/exports Due to structural challenges, as well as policy and property sector And as a result, China is facing
Slide 17: Credit Valuations
Credit Valuations Trading well through historical averages anchored by strong fundamentals Option-Adjusted Spreads 400 1,500 US Credit (left) US Corporate High-Yield (right) 350 1,300 300 1,100 250 900 Basis Points Basis Points 200 700 150 500 100 300 50 100 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 18: Emerging Markets
Emerging Markets EM inflation has normalized, and real yields remain high. Political and trade concerns are in focus. EM Policy Rates and Inflation EM Real Yields 10 5 Policy Rates Inflation 9 4 8 3 7 2 6 5 1 4 0 3 -1 2 -2 1 0 -3 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015 2016 2017 2018
Slide 19: Commercial MBS
Commercial MBS Commercial real estate asset prices are rebounding while spreads remain historically wide Property prices have begun to rebound while CMBS spreads remain wide as compared to historical corporate credit relationships 2024 new-issue volumes were consistent with pre-Covid averages de
Slide 20: AAA CLOs
AAA CLOs Net negative supply in 2024 and attractive spread AAA Supply via Gross Issuance AAA Amortization and Calls CLO ETF Inflows AAA Net Supply US Bank Holdings and Deposits 150 20 20 US Bank Deposits 15 18 100 US Bank Securities Holdings 10 16 5 14 50 1 5 12 USD (billions) USD (billions) USD (tr
Slide 21: Global Outlook
Global Outlook Global growth is moderating Inflation is gradually moving toward central bank targets Services inflation remains sticky Policy rates will trend lower US growth will continue to outpace other developed markets, supported by solid real income growth US policy initiatives may lead to bou
Slide 22: Questions & Answers
Questions & Answers OA oN “WESTERN ASSET Gi. 22
Slide 23: Thank you.
Thank you. a) FN WER? a e WasTERN ASSET
Slide 24: Risk Disclosure
Risk Disclosure © Western Asset Management Company, LLC 2025. 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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