Capital Markets Outlook

Oil prices and Fed policy shape our 2015 outlook

The steep drop in oil prices causes immediate pain for many leveraged companies in the U.S. energy sector as well as for oil-exporting emerging markets that have funded current account deficits with oil revenues.

Energy prices appear likely to remain lower for some time to come, creating widespread beneficiaries that include consumers, developed market economies, and oil-importing emerging markets.

The European Central Bank, which was already charting a course toward a sovereign-bond-purchase program, is now better able to overcome lingering opposition from German officials because lower oil prices add to the risk of outright deflation in Europe.

We believe the Fed's December policy statement indicates that interest-rate increases remain likely this year, but the pace of tightening may be less predetermined than the previous cycle 
of 2004 to 2006.

  • Strategy
  • Market themes
  • Equity views
  • Fixed-income views
  • Commodities/Currencies

Source: Putnam research, as of 12/31/14. Past performance is not indicative of future results.