Investment Outlook
The outlook anticipates that solid economic fundamentals, broadening earnings growth and easing inflation should support credit and equity markets in 2025.
It expects the Federal Reserve to make four 25-basis-point rate cuts during the year, while other central banks also move toward less restrictive policies.
Within corporate credit, Loomis Sayles sees attractive yields despite tight spreads and favors leveraged loans, investment grade and high yield markets, with emerging-market credit offering higher return potential than euro or sterling markets.
The document also assesses government debt, currencies and global equities.
It expects the US yield curve to steepen as short-term rates decline, while tariffs, fiscal policy and potential trade retaliation could complicate the economic outlook.
The US dollar remains richly valued, although trade negotiations could alter its trajectory.
In equities, earnings growth is expected to support global markets, while comparatively lower valuations and more muted sentiment create potential opportunities outside the US.
The outlook identifies historically expensive valuations, potentially excessive post-election optimism, renewed inflation, a slowdown in US growth and escalating military conflicts as key risks.
Its asset-class view highlights potential opportunities in non-US markets, while the fourth-quarter review documents 2024 performance across bonds, credit, currencies and equity markets, including the continued strength of US equities and the relative resilience of higher-yielding credit.
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