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Legg Mason portfolio managers respond to Federal Reserve rate hike.

BANKING AND CREDIT NEWS-December 22, 2015-Legg Mason portfolio managers respond to Federal Reserve rate hike

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Legg Mason (NYSE: LM) bond managers said they expected the US Federal Reserve (Fed) decision to raise interest rates and they believe this first step should restore normalcy to bond markets and prove advantageous to investors.

Western Asset Management portfolio manager and research analyst John L. Bellows, Ph.D said, "The Fed did exactly what everyone expected. The markets were ready. The 25 basis point hike was already priced in. Had they not raised it would have been very confusing to the markets, given the fairly clear communications they had been providing. But they delivered. The Fed was very clear about their desire to start the rate hiking cycle. They recently lowered the bar aggressively for what they needed to see to justify hiking. The economic data over the last few months, while not great, cleared the Fed's very low bar."

Co-director of global macro research and portfolio manager of global macro strategy for Legg Mason affiliate Brandywine Global Francis A. Scotland, acknowledged that markets anticipated the hike. However, he believes the Fed should not have been in any rush to raise rates, as inflation expectations did not justify liftoff.

The quarter-point rise is only the beginning of what most market watchers expect will be a steady rate climb away from zero by the Fed, which appears to be in no particular rush.

Scotland and the Brandywine Global team cautioned that the Fed should not rush to raise interest rates. They see several potential pitfalls that could cause significant economic damage.

Brandywine Global Investment Management offers a broad array of fixed income, equity, and balanced strategies that invest across global markets. As of September 30, 2015, Brandywine Global manages USD66 billion in assets. The firm is a wholly owned, independently operated subsidiary of Legg Mason, Inc., and is headquartered in Philadelphia with an office in San Francisco. Brandywine Global also operates two affiliated companies with offices in Singapore and London.

Western Asset Management is a leading fixed-income managers with USD446.1 billion in assets under management as of September 30, 2015. The firm is a wholly owned, independently operated subsidiary of Legg Mason, Inc.

Legg Mason is a global asset management firm with USD697 billion in assets under management as of September 30, 2015. The company provides active asset management in many major investment centers throughout the world.

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Publication:M2 Banking & Credit News (BCN)
Date:Dec 22, 2015
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