LIVE MARKETS-US economy more like an emerging market -Loomis Sayles portfolio manager

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

US ECONOMY MORE LIKE AN EMERGING MARKET -LOOMIS SAYLES PORTFOLIO MANAGER

Andrea DiCenso, co-portfolio manager, Alpha Strategies Team at Loomis Sayles, says in a recent panel discussion in New York that the United States is acting more like an emerging market these days, given the shift in capital flows and the higher premium investors are demanding to hold U.S. assets.

"Typically, when you think about an emerging market, you demand a higher risk premium for that uncertainty and we are just in the early phases of that repricing, I would say, across DM (developed markets) assets, specifically within the United States.

"You've seen some early flows shifting out of the U.S. due to that uncertainty. That's completely warranted. It's over-owned, likely overvalued, and trading through its fair value, and now you have introduced a huge headwind to future growth: tariffs."

Custody flows data from BNY showed that holdings of U.S. equities have declined since the end of last year and there has been a clear shift in equity allocations to Europe. That said, BNY points out that there has been an "appreciable drawdown in equity exposure across the world" since tariffs were announced, as both U.S. and Eurozone equities have repriced lower on the news.

In Treasuries, flows are mixed at best, according to BNY data, with U.S. Treasuries still viewed as a safe haven overall, but perhaps with less conviction.

So where do we go from here? DiCenso thinks the path forward for the United States is murky because the market and economy are beholden to one person's decision-making. She also alluded to the different philosophies within the Trump Administration: tariff hawk and trade adviser Peter Navarro, who says the government is not negotiating tariffs, and Treasury Secretary Scott Bessent affirming that President Donald Trump is open to negotiations.

"Being an investor in the U.S. under President Trump is really about becoming used to chaos and uncertainty, and as a result, I'm looking elsewhere," DiCenso says. "I'm looking to where I am actually getting paid for that uncertainty underlying in the asset prices, like Latin America."

(Gertrude Chavez-Dreyfuss)

FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

S&P 500 PRETTY WASHED OUT, BUT CHART HURDLES TOUGH TO CLEAR - CLICK HERE

CUT THE TARIFF NOISE; US CONSUMERS STILL SPENDING - CLICK HERE

COOL CPI, LOW JOBLESS CLAIMS LOST IN THE FOG OF ONGOING TRADE WARS - CLICK HERE

WALL STREET REVERSES AFTER MASSIVE TARIFF-PAUSE RALLY - CLICK HERE

U.S. STOCK FUTURES STILL RED AFTER COOLER-THAN-EXPECTED CPI - CLICK HERE

EARNINGS SEASON "MARKET'S MOMENT OF TRUTH" - SAXO - CLICK HERE

WILL THE "BUY EUROPE" TRADE RAISE ITS HEAD? - CLICK HERE

MARKET WATCHERS MULL RALLY'S LONGEVITY - CLICK HERE

EUPHORIC MARKETS - CLICK HERE

BEFORE THE BELL: BOUNCING LIKE IN COVID TIMES - CLICK HERE

SIGNS OF TROUBLE IN THE RELIEF RALLY - CLICK HERE