September 2024
Market Pulse
Leveraging expertise from the MFS Market Insights team to provide timely perspectives on economic and market dynamics that are top of mind for clients.
September 2024
Market Pulse
Leveraging expertise from the MFS Market Insights team to provide timely perspectives on economic and market dynamics that are top of mind for clients.
Benoit Anne
Managing Director
Investment Solutions Group
Jonathan Hubbard, CFA
Managing Director
Investment Solutions Group
Brad Rutan, CFA
Managing Director
Investment Solutions Group
KEY TAKEAWAYS
|
Economy & Markets
| US GROWTH
Pressure easing housing concerns |
MFS PERSPECTIVE
|
| US CONSUMER
Real retail sales have been robust |
MFS PERSPECTIVE
|
| LABOR MARKET
Layoffs are down for a fourth straight month |
MFS PERSPECTIVE
|
| LENDING CONDITIONS
The SLOOS now shows only a moderate tightening bias |
MFS PERSPECTIVE
|
Asset Allocation
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
We are moving from a slight overweight in fixed income to a neutral position as a soft landing becomes our base case and earnings momentum remains strong.
MFS PERSPECTIVE
1 |
2 |
3 |
4 |
As the Fed signals that the time for rate cuts has arrived, a solid jobs market and a strong consumer strengthens the case for a soft landing. In this scenario, stocks and bonds could both do well. A broad, global rate-cutting cycle is underway. |
Earnings growth momentum remains strong. While valuations look stretched in pockets of US equities, earnings have been able to support higher multiples. We favor large value, which offers an attractive downside capture, valuation and dividend profile. |
Duration remains attractive as a Fed easing cycle approaches. Assuming a soft landing, credit offers high all-in yields and low default risks. Spreads remain tight, so carry and lower rates are more likely to contribute to return than spread compression. |
The equal-weighted S&P 500 is trading at a significant discount to the cap-weighted index, presenting attractive opportunities for active investors. International equities remain undervalued relative to both the cap-weighted S&P 500 and history. |
Equity
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
|
MFS CONSIDERATIONS |
LARGE CAP |
|
SMALL/MID CAP |
|
GROWTH |
|
VALUE |
|
BLANK
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
DEVELOPED INTERNATIONAL EQUITY |
M F S C O N S I D E R A T I O N S |
BLANK
EMERGING MARKET EQUITY |
M F S C O N S I D E R A T I O N S |
Fixed Income
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
DURATION |
M F S C O N S I D E R A T I O N S |
MUNICIPALS |
M F S C O N S I D E R A T I O N S |
SECURITIZED (MBS) |
M F S C O N S I D E R A T I O N S |
BLANK
US INV-GRADE CORP |
M F S C O N S I D E R A T I O N S |
US HIGH YIELD |
M F S C O N S I D E R A T I O N S |
EMERGING MARKET DEBT |
M F S C O N S I D E R A T I O N S |
The Market Pulse leverages the firm’s intellectual capital to provide perspective on broad market dynamics that are top of mind for asset allocators. We celebrate the rich diversity of opinion within our investment team and are proud to have talented investors who may implement portfolio positions and express different or nuanced views to those contained here, which are aligned to their specific investment philosophy, risk budget and entrusted duty to allocate our client’s capital responsibly.
The views expressed herein are those of the MFS Investment Solutions Group within the MFS distribution unit and may differ from those of MFS portfolio managers and research analysts. These views are subject to change at any time and should not be construed as MFS’ investment advice, as portfolio positioning, as securities recommendations, or as an indication of trading intent on behalf of MFS.
Index data source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Frank Russell Company (“Russell”) is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.
“Standard & Poor’s®” and S&P “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ Products are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such products. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith The views expressed are subject to change at any time.
These views should not be relied upon as investment advice, as portfolio positioning, as securities, recommendations or as an indication of trading intent on behalf of the advisor. No forecasts can be guaranteed.
| US GROWTH
Pressure easing housing concerns |
MFS PERSPECTIVE
|
| US CONSUMER
Real retail sales have been robust |
MFS PERSPECTIVE
|
| LABOR MARKET
Layoffs are down for a fourth straight month |
MFS PERSPECTIVE
|
| LENDING CONDITIONS
The SLOOS now shows only a moderate tightening bias |
MFS PERSPECTIVE
|
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
We are moving from a slight overweight in fixed income to a neutral position as a soft landing becomes our base case and earnings momentum remains strong.
MFS PERSPECTIVE
1 |
2 |
3 |
4 |
As the Fed signals that the time for rate cuts has arrived, a solid jobs market and a strong consumer strengthens the case for a soft landing. In this scenario, stocks and bonds could both do well. A broad, global rate-cutting cycle is underway. |
Earnings growth momentum remains strong. While valuations look stretched in pockets of US equities, earnings have been able to support higher multiples. We favor large value, which offers an attractive downside capture, valuation and dividend profile. |
Duration remains attractive as a Fed easing cycle approaches. Assuming a soft landing, credit offers high all-in yields and low default risks. Spreads remain tight, so carry and lower rates are more likely to contribute to return than spread compression. |
The equal-weighted S&P 500 is trading at a significant discount to the cap-weighted index, presenting attractive opportunities for active investors. International equities remain undervalued relative to both the cap-weighted S&P 500 and history. |
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
|
MFS CONSIDERATIONS |
LARGE CAP |
|
SMALL/MID CAP |
|
GROWTH |
|
VALUE |
|
BLANK
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
DEVELOPED INTERNATIONAL EQUITY |
M F S C O N S I D E R A T I O N S |
BLANK
EMERGING MARKET EQUITY |
M F S C O N S I D E R A T I O N S |
• UNDERWEIGHT • NEUTRAL • OVERWEIGHT
DURATION |
M F S C O N S I D E R A T I O N S |
MUNICIPALS |
M F S C O N S I D E R A T I O N S |
SECURITIZED (MBS) |
M F S C O N S I D E R A T I O N S |
BLANK
US INV-GRADE CORP |
M F S C O N S I D E R A T I O N S |
US HIGH YIELD |
M F S C O N S I D E R A T I O N S |
EMERGING MARKET DEBT |
M F S C O N S I D E R A T I O N S |
The Market Pulse leverages the firm’s intellectual capital to provide perspective on broad market dynamics that are top of mind for asset allocators. We celebrate the rich diversity of opinion within our investment team and are proud to have talented investors who may implement portfolio positions and express different or nuanced views to those contained here, which are aligned to their specific investment philosophy, risk budget and entrusted duty to allocate our client’s capital responsibly.
The views expressed herein are those of the MFS Investment Solutions Group within the MFS distribution unit and may differ from those of MFS portfolio managers and research analysts. These views are subject to change at any time and should not be construed as MFS’ investment advice, as portfolio positioning, as securities recommendations, or as an indication of trading intent on behalf of MFS.
Index data source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Frank Russell Company (“Russell”) is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.
“Standard & Poor’s®” and S&P “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ Products are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such products. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith The views expressed are subject to change at any time.
These views should not be relied upon as investment advice, as portfolio positioning, as securities, recommendations or as an indication of trading intent on behalf of the advisor. No forecasts can be guaranteed.