T. Rowe Price Group, Inc. · NASDAQ:TROW

T. Rowe Price — 2016 Global Market Outlook Press Briefing

15 slides from T. Rowe Price's conference presentation, Nov 18, 2015

  1. Slide 1: Global Fixed Income Overview

    2016 Global Market Outlook Press Briefing GLOBAL FIXED INCOME OVERVIEW Edward A. Wiese, CFA, Head of Fixed Income November 18, 2015

  2. Slide 2: Global Fixed Income Outlook: Summary

    Global Fixed Income Outlook: Summary Environment  Developed market yields remain low almost everywhere. Volatility increased in the third quarter across sectors, currencies and rates. A surprise devaluation of the Chinese yuan, continued weakness in commodity prices, and increasing macroeconomic de

  3. Slide 3: Developed Market Bond Yields

    Developed Market Bond Yields As of September 30, 2015 10-YEAR YIELDS (%) 20 U.S. UK Germany Spain 18 16 14 12 Yield (%) 10 8 6 4 2 0 Sep-64 Sep-67 Sep-70 Sep-73 Sep-76 Sep-79 Sep-82 Sep-85 Sep-88 Sep-91 Sep-94 Sep-97 Sep-00 Sep-03 Sep-06 Sep-09 Sep-12 Sep-15 Past performance is not a reliable indica

  4. Slide 4: FX-Adjusted Yields: Low Everywhere

    FX-Adjusted Yields: Low Everywhere As of September 30, 2015 10-YEAR YIELDS (CURRENCY HEDGED BACK TO USD) 4 3 2 1 (%) 0 -1 -2 -3 Past performance is not a reliable indicator of future performance. Sources: J.P. Morgan and T. Rowe Price. 4

  5. Slide 5: Divergent Monetary Policies Create Interest Rate and Currency Opportunities

    Divergent Monetary Policies Create Interest Rate and Currency Opportunities As of October 23, 2015 ILLUSTRATIVE INTEREST RATE CYCLE Interest rates down Brazil Philippines Interest rates up New Zealand India Interest rates stable Interest rates up China South Korea South Africa YTD 2015 70 May 2005 –

  6. Slide 6: Interest Rate Differentials vs. U.S.

    Interest Rate Differentials vs. U.S. As of September 30, 2015 10-YEAR YIELDS (%) Brazil-U.S. India-U.S. Philippines-U.S. Germany-U.S. 14 12 10 8 6 4 2 0 -2 -4 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Past performance is not a reliable indicator of future performance. Sources: T

  7. Slide 7: Credit Markets Have Started to Diverge

    Credit Markets Have Started to Diverge As of September 30, 2015 HISTORICAL RISK PREMIUM Option-Adjusted Spreads (%) 8 U.S. High Yield Bonds YTD Last 3-Months’ Euro High Yield Bonds Performance Performance 7 EM Hard Currency Sovereign Debt EM Hard Currency Corporate Debt U.S. High Yield Bonds -2.53%

  8. Slide 8: Commodity-Related Bonds Have Been Severely Affected

    Commodity-Related Bonds Have Been Severely Affected As of September 30, 2015 CUMULATIVE PERFORMANCE—LAST 12 MONTHS Base 100 = September 30, 2014 110 Euro High Yield +0.24% 100 U.S. High Yield -3.57% 90 U.S. High Yield—Energy 80 -21.72% Ecuador—Hard Currency -24.33% 70 U.S. High Yield—Metals/Mining -

  9. Slide 9: Are Current EM Debt Valuations Justified?

    Are Current EM Debt Valuations Justified? As of September 30, 2015 RISK PREMIUM Option-Adjusted Spreads in Basis Points 675 U.S. Fiscal Cliff and EU Taper Commodity Fragmentation Worries Tantrum Crisis 625 575 Credit Spread (basis points) 525 EM Corporate 475 425 375 325 275 EM Sovereign 225 Past pe

  10. Slide 10: Broader EM "China Syndrome"

    Broader EM “China Syndrome” As of October 12, 2015 EMs Following China Lower Rapid Debt Buildups Increase EM Vulnerability 58 40 Debt (% of GDP) 56 35 Debt Service (% of Income) 54 30 52 Net Percent Increasing Change: 2007 to 2014 25 50 48 20 46 15 Manufacturing PMI 44 China 10 EM Excl. China 42 5 4

  11. Slide 11: Reform Potential in EM Should Not Be Overlooked

    Reform Potential in EM Should Not Be Overlooked  Mexico  Indonesia – Opening oil sector to private enterprise – Shift to manufacturing – Media and telecom competition – Tax collection – Education – Fuel subsidies  Brazil  India – Fiscal consolidation – Fiscal consolidation – Anti-corruption – La

  12. Slide 12: The Outlook for the U.S. Dollar Is Less Certain

    The Outlook for the U.S. Dollar Is Less Certain As of September 30, 2015 USD INDEX USD INDEX CURRENT VS. HISTORY 12-MONTH % CHANGE 170 40 Dollar Index Average 30 150 20 Dollar Appreciation 10 130 0 110 -10 -20 90 -30 70 -40 Jun-67 Jun-70 Jun-73 Jun-76 Jun-79 Jun-82 Jun-85 Jun-88 Jun-91 Jun-94 Jun-97

  13. Slide 13: Currency: A Case-by-Case Story

    Currency: A Case-by-Case Story As of September 30, 2015 DEVELOPED MARKET CURRENCIES EMERGING MARKET CURRENCIES Base 100 = Dec. 31, 2014 Spot vs. USD Base 100 = Dec. 31, 2014, Spot vs. USD 105 105 Euro Chinese Renminbi Japanese Yen Mexican Peso Canadian Dollar South African Rand 100 100 95 95 90 90 8

  14. Slide 14: Important Information

    Important Information This material has been prepared for informational purposes only. The views contained herein are those of the presenter as of the date of the presentation and are subject to change without notice; these views may differ from those of other T. Rowe Price associates. Information a

  15. Slide 15: Thank You

    T.RowePrice’

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