Brandywine Global Investment Management

With the Federal Reserve in President Trump’s crosshairs, Head of Global Macro Strategy & Portfolio Manager Paul Mielczarski tells MarketWatch “Investors are clearly concerned about the potential for a loss of Fed independence, which would drive the yield curve steeper and the dollar weaker.” https://lnkd.in/eKePTzQ7

President Trump’s intent to fire Federal Reserve governor Lisa Cook could call the central bank’s independence into question. “From a bond investor standpoint, it just adds a little more uncertainty and too much emphasis on the Fed, as opposed to the underlying economy and what the data is telling us,” Portfolio Manager Jack McIntyre tells The Financial Times: https://on.ft.com/4n11doA

Despite the significant threat of tariffs, Europe has shown surprising economic resilience. According to Research Analyst Gautam Soundararajan, structural forces, including monetary and fiscal support, have overcome cyclical headwinds for now: https://bit.ly/4n7Up8N

Firms Explore a Range of Tariff Responses: Many companies expect to pass higher tariff costs on to customers, but others are adapting in different ways—absorbing costs, shifting suppliers, or accelerating purchases. https://bit.ly/4mSlAV2

Portfolio Manager and Senior Research Analyst Carol Lye tells AsianInvestor that macroeconomic conditions are magnifying the shift to other markets, like Asia, and away from the US. “With the slowing in fiscal spending, higher inflation versus the rest of the world, and political uncertainty, the US is in a stagflationary environment, which has resulted in a tactical reallocation out of US assets,” she says: https://bit.ly/3VfGVvG

As tariff uncertainty roiled markets back in April, Portfolio Manager William Zox, CFA said investors must become “comfortable being uncomfortable,” arguing that the comfortable move is rarely the right one over time. Twenty weeks later, this Bloomberg News article looks at where US high yield credit is now: https://bloom.bg/475lcxV

Did Federal Reserve Chair Jay Powell’s Jackson Hole speech shed new light on the outlook for the US labor market, inflation, or monetary policy? According to Portfolio Manager Jack McIntyre, a September rate cut seems likely.

US Consumer Spending Is Slowing: The personal consumption component of GDP rose at an annualized rate of 1.4% in Q2, up from 0.5% in Q1. While growth accelerated quarter-over-quarter, the combined pace over the first half of the year marks the slowest six-month period since 2020. https://bit.ly/47rX1tt

President Trump’s intent to fire Federal Reserve governor Lisa Cook could call the central bank’s independence into question. “From a bond investor standpoint, it just adds a little more uncertainty and too much emphasis on the Fed, as opposed to the underlying economy and what the data is telling us,” Portfolio Manager Jack McIntyre tells The Financial Times: https://on.ft.com/4n11doA

Portfolio Manager and Senior Research Analyst Carol Lye speaks with AsianInvestor about the steadiness of Asian bond markets. “Many Asian sovereigns have been cutting interest rates, and they have also not been re-leveraging on external debt,” she says. “With still resilient growth and low external debt, this has resulted in the stability of Asian USD bonds. This is likely to persist in a global risk‑off environment.” https://bit.ly/4mre0kf