Every six months, we share insights from Loomis Sayles portfolio managers and analysts; what are the current themes and risks shaping their investment decisions? Looking into 2017, geopolitical shifts, rising rates, regulatory changes and new proposed policies from President-elect Trump will all be key factors. Read on for quick takes across a variety of asset classes and sectors:

Geopolitics

"In country after country, we are seeing populations continue to move down a divisive nationalist path - the extremes may gain traction while the middle ground gets hollowed out. This will likely cause challenges for governing bodies to keep unrest at bay and bring new policy to bear. How will this stronger growth in the short term be paid for in the long term?"

— Elaine Stokes, Portfolio Manager, full discretion team

Europe

"European political dynamics will take center stage in 2017. Markets are likely going to be keenly sensitive to the performance of populist parties in upcoming elections in "core" countries like the Netherlands, France, and Germany. The evolution of UK/EU Brexit negotiations will also be key, with the UK aiming to start the process in the first quarter of the new year. The consequences of Italy's rejection of the constitutional referendum will also carry into the new year, as policymakers wrestle with stress on the banking system from the large overhang of non-performing loans, persistently low economic growth and bank profitability, and the increasing capital gains of some banks, all while trying to avoid forcing losses onto retail bondholders.”

— Laura Sarlo, Senior Sovereign Analyst

Emerging Markets

"Emerging markets investors should differentiate carefully in 2017 as we see both negatives and positives looming. Stable global growth, supported by signs of improvement in the United States, would be good for emerging markets in general. However, higher Treasury yields and a stronger US dollar resulting from changes in US fiscal policy, could create negative sentiment for emerging markets. We will continue to look for value in commodity stories - not just main stream copper, aluminum and oil - but also zinc and tin. Country-by-country, we will also be looking closely at political reform, geopolitical risk, world trade flows, and of course relative value. India, Indonesia, Brazil and South Africa may be of particular interest in 2017."

— Elisabeth Colleran, Portfolio Manager, emerging markets team

Corporate Bonds

""While the election of Donald Trump has resulted in some wild repricing across markets, we continue to remain favorable on corporate bonds for three reasons:

1. The bulk of the near-term rate rise appears complete, while the expected boost to growth and inflation from Trump's tax and infrastructure plans will probably not occur until 2018

2. Trump's plan to allow companies to repatriate offshore funds at reduced tax rates, as well as the likelihood that companies will operate cautiously in this uncertain environment, may result in lower corporate bond supply

3. Higher rates will continue to encourage investment from global investors seeking higher yields"

— Scott Service, Portfolio Manager, global fixed income team

Equities

"The prospects for corporate tax reform and infrastructure spending have brightened equity market expectations following the US election. For the first time in quite a while, Washington could be a source of positive earnings catalysts in the months ahead. Both large-cap and smaller cap stocks may be poised to benefit from policy changes and this broadening of equity market leadership should be a good thing all around."

— Richard Skaggs, Senior Equity Strategist

Interest Rates

"The recent rise in 10-year US Treasury rates of over three-quarters of a percent since the end of September, may present opportunities in the mortgage market. I believe prices may shift from being premium to discounted. This could offer investors like us the chance to invest in high quality, liquid securities with attractive return profiles."

— Chris Harms, Portfolio Manager, relative return team

Russia

"In my view, the needle has moved slightly more favorably for Russia. Support for continued sanctions against Russia is declining in the west and despite German Chancellor Merkel’s commitment to maintaining the sanctions, she seems to be losing support across the EU, particularly in Italy and France. Brexit has removed the UK as a strong ally to Merkel in this fight. As for the US, President-elect Trump has hinted at some degree of cooperation with Russia, though nothing is definitive yet."

—Darcie Sunnerberg, Senior Sovereign Analyst

Mexico

" I expect lower growth and continued weakness in the peso for 2017. President-elect Donald Trump has brought uncertainty to emerging markets and Mexico in particular. The Mexican peso has depreciated 10% since the US election and its recovery will depend largely on whether President-elect Trump pushes through with tariffs on Mexican goods. Until we have clarity as to what the new administration’s actual trade reform will look like, both domestic and foreign investments into the country are likely to stagnate."

—Bianca Taylor, Senior Sovereign Analyst