Western Asset Core Plus Bond Fund Class R · NASDAQ:WAPRX
Western Asset Core Plus Bond Fund Class R — Western Asset — Earnings Presentation (March 2025)
25 slides from Western Asset Core Plus Bond Fund Class R's earnings presentation, Mar 26, 2025
Slide 1: 2Q25 Market & Strategy Update
March 26, 2025 2Q25 Market & Strategy Update Michael Buchanan, CFA Catherine Matthews Chief Investment Officer Global Product Specialist Western Asset
Slide 2: Year-to-Date 2025 Global Fixed-Income Returns
Year-to-Date 2025 Global Fixed-Income Returns Government 8.0 7-10 Year Gov’t Bond 7.0 Total Return (%) 2.1 3.1 0.6 0.8 0.9 1.4 -1.6 -1.5 -1.3 -1.1 -2.7 -2.7 Germany Japan Spain Italy China France South Australia UK Poland Indonesia US Brazil Mexico Africa Source: Bloomberg, J.P. Morgan. As of 18 Mar
Slide 3: Economic Data Surprised…
Economic Data Surprised… ...to the downside in the US but showed improvement in the eurozone Citi Surprise Index 60 US Eurozone 40 20 Index 0 -20 -40 -60 Sep 24 Oct 24 Nov 24 Dec 24 Jan 25 Feb 25 Mar 25 Source: Bloomberg. As of 20 Mar 25 The above reflects current opinions of Western Asset, which ar
Slide 4: US vs. Germany
US vs. Germany 10-Year US vs. German Government Bond Yield 5.0 US Germany 4.5 4.0 Percent 3.5 3.0 2.5 2.0 Sep 24 Oct 24 Nov 24 Dec 24 Jan 25 Feb 25 Mar 25 Source: Bloomberg. As of 20 Mar 25 10-Year US vs. German Government Bond Spread 2.4 2.2 2.0 Percent 1.8 1.6 1.4 1.2 Sep 24 Oct 24 Nov 24 Dec 24 J
Slide 5: Global Outlook
Global Outlook Global growth converging, with US exceptionalism waning Further progress on inflation expected Growth and inflation outlook clouded by tariff uncertainty Downside risks to the US labor market have increased Policy rates will be cut further despite crosscurrents from growth and inflati
Slide 6: Global Economic Expectations
Global Economic Expectations US exceptionalism waning GDP (% change) 2024 2025 (F) 2026 (F) 6 5 4.8 4.6 4.5 4 Percent 3 2.8 2.7 2.1 2 1.4 1.0 1 0.8 0 US Eurozone China Source: OECD Economic Outlook, Interim Report March 2025 The above reflects current opinions of Western Asset, which are subject to
Slide 7: Offsetting Impacts to GDP Growth
Offsetting Impacts to GDP Growth Tariff impacts set to be front-loaded ● Tariffs weigh on growth ● Tax cuts and regulatory easing will provide some offset ● Near-term net impact to be growth negative, but should moderate over time Impact on Year-over-Year GDP Growth Consumption & Govt. Spending Fisc
Slide 8: US Labor Market
US Labor Market Downside risks to jobs and growth have increased with DOGE layoffs, business uncertainty due to tariff policy, and slowing immigration Trade Policy Uncertainty and Small US Initial Claims - Federal Employees Business Uncertainty are High 210 2500 1800 Small Business Uncertainty¹ (lef
Slide 9: US Consumption
US Consumption Despite growth concerns, outlook is underpinned by continued strong personal income growth ● Real incomes have remained healthy ● Wage compensation has picked up, but productivity has improved US Revolving Consumer Credit as a Percent Real Personal Incomes Rebounding – 6-Month a.r. of
Slide 10: US Inflation
US Inflation The path to 2% core inflation has been slow and arduous ● Policy initiatives adding uncertainty Core PCE Deflator and 1-Year Inflation Expectations Core PCE Deflator University of Michigan 1-Year Expectations 1-Year CPI swaps 7% 6% Annualized Percentage Change 5% 4% 3% 2% 1% 0% 2018 201
Slide 11: US Interest Rates
US Interest Rates Timing is uncertain. Direction is not. Fed Funds Fed Funds Forecast Fed Funds Swap Market 6% FOMC 5% Forecast 4% 3% 2% 1% 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Source: Federal Reserve, Haver Analytics. As of 19 Mar 25 There is no assurance that an
Slide 12: Global Disinflation Trend Is Slowing
Global Disinflation Trend Is Slowing Services inflation remains sticky. Tariffs present additional uncertainty Global Inflation¹ Headline Core Core Goods Services 8% 7% 6% 5% Year-over-Year 4% 3% 2% 1% 0% -1% 2016 2018 2020 2022 2024 Source: Citigroup, Haver Analytics. As of 28 Feb 25 ¹Headline and
Slide 13: Eurozone: Fiscal Boost, Tariff Fears and Ukraine Hope
Eurozone: Fiscal Boost, Tariff Fears and Ukraine Hope Fiscal boost supports growth and confidence Fiscal Boost ● Positive growth impact will be slow to build especially as defense spending has a low multiplier and high overseas procurement Tariff Fears ● Negative growth impact is quite front loaded
Slide 14: United Kingdom
United Kingdom “A gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate” – BoE, Feb 2025 ● Energy-related base effects will lift headline inflation, but domestic price pressures are easing ● Official wage growth is high, but at odds with other indicators
Slide 15: Japan
Japan Higher wages along with higher inflation forecasts strongly suggest Japanese yields need to rise in the long run ● The BoJ will tighten policy to normalize real interest rate ● Base pay increased 3.0% YoY, the highest level since September 1992, due mainly to a structural labor shortage Policy
Slide 16: China
China Deflationary pressures remain and confidence is weak, but sentiment is improving ● Due to structural challenges, as well as policy and property sector malaise, confidence remains weak ● As a result, China is facing deflation not inflation Chinese Consumer Confidence China YoY CPI 130 10 8 120
Slide 17: 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 Percent Percent 5 1 4 0 3 -1 2 -2 1 0 -3 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015
Slide 18: Volatility Will Create Opportunities in 2025
Volatility Will Create Opportunities in 2025 Spread sector and interest rate volatilities have diverged MOVE Index Credit Spread Volatility 250 200 150 Index 100 50 0 2021 2022 2023 2024 2025 Source: Bloomberg. As of 14 Mar 25 The above reflects current opinions of Western Asset, which are subject t
Slide 19: Investment-Grade Credit
Investment-Grade Credit Fundamentals resilient but spreads are tight Bloomberg U.S. Credit Index: Option-Adjusted Spread Option-Adjusted Spread (bps) 600 +545 bps 500 400 +341 bps 300 +231 bps 200 Credit OAS: +85 bps 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20
Slide 20: High Yield
High Yield Fundamentals resilient. High yield corporates should weather slower growth without meaningful issues BB US High Yield Index 450 400 350 300 Basis Points 250 200 150 100 2021 2022 2023 2024 2025 Source: Bloomberg. As of 24 Mar 25 OAS 18 Feb 25 13 Mar 25 24 Mar 25 BB/B US High Yield 191 261
Slide 21: Commercial MBS
Commercial MBS Commercial Real Estate price growth accelerating, CMBS issuance healthy, spreads compelling Single A CMBS vs. BBB Corp Spread Current +341 10-Year Average +163 CRE Price Growth (MoM) CMBS Issuance 1.0% 250 0.5% 200 0.0% 150 USD (billions) -0.5% 100 -1.0% 50 -1.5% -2.0% 0 2022 2023 202
Slide 22: Global Outlook
Global Outlook Global growth converging, with US exceptionalism waning Further progress on inflation expected Growth and inflation outlook clouded by tariff uncertainty Downside risks to the US labor market have increased Policy rates will be cut further despite crosscurrents from growth and inflati
Slide 23: Questions & Answers
Questions & Answers + Q A Western Asset 23
Slide 24: Western Asset
WESTERN ASSET A Franklin Templeton Company
Slide 25: 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