Fourth Quarter 2020 Global Outlook

Western Asset: Our base case outlook is for an elongated, U-shaped global economic recovery. Here, we provide a summary of key drivers behind our global outlook and describe where we see value across global fixed-income markets.

Executive Summary

  • Forceful policy action to date has buoyed global economic activity and restored market functioning, but we are wary of several potential disruptors: the upcoming US presidential election, post-Brexit trade negotiations, US-China trade discussions and geopolitical tensions.
  • While the US recovery story remains in place, we continue to see a bifurcated economy, with near-complete recovery in some sectors, but only partial recovery in those sectors most affected by social distancing.
  • In Europe, we now believe that the better-than-expected economic rebound underway in Q3 will run into more significant headwinds during Q4, mainly due to (local) restrictions intended to help contain second-wave COVID-19 infections and also due to fading fiscal policy support.
  • Prospects for Asia growth are much improved as key countries continue to benefit from both fiscal and monetary policy space, and by policymakers’ willingness to do whatever it takes to prop up their economies.


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