Western Asset: Global Outlook

Western Asset expects US and global growth to decelerate from their cyclically driven highs as we move into 2022. Contributing factors include a sharp reduction in global fiscal stimulus, a reduction in monetary accommodation by key central banks such as the US Federal Reserve (Fed) and the European Central Bank (ECB) and the persistence of secular-related headwinds that include rising global debt burdens, aging demographics and technology displacement.

lnflation remains challenging for policymakers, but we expect the impact of supply-chain disruptions to ease meaningfully through the course of next year. While COVID-19 continues to bedevil global populations, we are optimistic that the worst is behind us, which bodes well for the continued recovery of reopening sectors and spread product performance. Here, we provide a summary of the key drivers behind our global outlook and describe where we see value across global fixed-income markets.