Putnam Perspectives blog

Putnam's investment professionals offer compelling analysis of evolving market themes.

Putnam Fixed Income Team

The ECB relies on smoke and mirrors

Putnam Fixed Income Team, 3/21/14

In Europe, slow growth appears likely to continue, with some regional differentiation. Signs of strength in the south Spain is doing much better than it had been just 18 months ago, and even Italy looks somewhat healthy now that its political crisis has passed. Importantly, fiscal pressure in the form of austerity programs is slated to ease somewhat this year. In a positive scenario, this could boost GDP growth, improve revenue growth for corporations, and result in ... Continue

Title

Three reasons this credit cycle may be lasting

Today, more than four years into the recovery, capital market opportunities are shifting, with conditions in credit sectors such as high-yield corporate debt becoming a bit less attractive. However, the current ...

Rate volatility poses more risk than rising rates

While rising bond yields are consistent with a strengthening economic recovery, they also prompt the concern among businesses and investors that higher interest expenses could become a drag on continued expansion. ...

Labor force changes leave restaurants feeling the pinch

A lackluster U.S. economic recovery and declining consumer sentiment often get blamed for weak sales at restaurants. However, another important factor has emerged: Fewer women are working outside the home. Weaker consumer ...

Two engines that could power earnings growth

After moving sideways for the past two years, U.S. corporate earnings may be poised for reacceleration in 2014. While the growth is likely to be modest, we believe investors may be ...

Why wages might rise

Unemployment continues to drop, but not because a lot of new jobs are being created, as many would hope. Instead, the unemployment rate is dropping primarily due to a declining labor ...

Developed markets forge ahead

Emerging markets are vulnerable to the marginal tightening of U.S. monetary policy, we believe, caused by the reduction in bond purchases by the Fed. In December, the Fed announced it would ...

Brazil shines for some luxury goods makers

It can be challenging for a retail manufacturer to break into foreign markets, particularly when draconian import duties lead to price inflation and frustrate the growth of the retailer's brand. Penetrating new ...

Chinese tourists become big spenders

Tourists from China spent more money abroad in 2012 than tourists from any other country. At US$102 billion, Chinese international tourism eclipsed - by 20% - the total amount spent by ...

Is the Fed fighting the last war?

In recent posts, we have approached the problem of the outlook for interest rates by outlining the questions that surround the potential growth rate of the U.S. economy. It is established ...

If the economy grows, will workers come back?

A look at recent trends in the U.S. economy suggests that the potential U.S. growth rate is declining. The first reason for this conclusion is that investment has been so weak ...

Investing for growth even when businesses don't

Despite the recovering economy, capital spending by U.S. businesses has yet to pick up in a meaningful way. Businesses still have record amounts of cash on their balance sheets, but rather ...

A transitioning health-care sector offers value

Despite recent outperformance in the sector, we believe health-care stocks remain attractively valued. Health-care price-earnings multiples have recently moved closer to those of the broader market, but are still considerably lower ...

How yields can change in a "normalizing" economy

As the Federal Reserve plots its actions and communications strategy for the gradual normalization of monetary policy, fixed-income investors face the challenge of anticipating the future course of interest rates. Economic growth ...

Does an inflation surprise lurk in Fed stimulus?

Ever since the topic of stimulus tapering was aired in June, the Fed has hastened to clarify its message: We'll taper if and only if the data argues for tapering. Generally ...

International markets rouse from their slumber

The global economy is finding new engines of growth in the developed markets. U.K. policy mix has improved In the United Kingdom, we see a balance of fiscal retrenchment and stimulative monetary policy, ...

This sector has a stronger pulse than the market

Investors should take notice of positive developments in the health-care sector. The market already has. Stable earnings and solid fundamentals have led health care - a typically defensive sector - to ...

European brands court Chinese consumers

Since the mid 2000s, the rise of the Chinese consumer has transformed global luxury markets, opening new horizons for European companies. The challenge is to harness the buying power of China?s rapidly growing upper-middle and more affluent classes.

Consumer and business spending could lift stocks

U.S. GDP growth during the recovery, underway since the middle of 2009, is among the weakest in recent history. It has averaged a little over 2% for the past four years, ...

Are muni bonds too tempting for the tax man?

Washington's off-again, on-again debate about the tax exemption of municipal bonds appears to be off again as lawmakers grapple with budget and debt issues. Proposals to change the tax treatment of

This housing trend can influence Fed's tapering

One of the decision points that the Fed will encounter as it considers tapering its quantitative easing (QE) measures will be the relative strength of the housing market. One factor influencing ...

What rising rates mean for stock dividends

Although rising interest rates will likely taper demand for dividend-paying stocks, we have seen a significant expansion in the universe of companies with the ability and willingness to pay a dividend. The ...

What value hunters might see in European stocks

While we believe risks in global markets are not trivial, when we review international markets for contrarian opportunities, Europe is a place where value may be available. Equities in Italy, Spain, and

Egypt in crisis could spark oil price risk

Given our relatively pessimistic outlook for commodities, we have favored a modest underweight stance for this asset class. Commodities generally behave with more momentum than reversion, and entered the current quarter coming ...

Warming economy may leave bond index cold

It appears likely that the U.S. economy will continue to improve, keeping interest rates elevated and volatile. The U.S. recovery, despite higher taxes, generally rising interest rates, and broad-based budget cuts enforced ...

The end of QE coming into focus

Given the climate of rising rates - and the degree to which rates have shown their ability to back up on fears of the eventual quantitative easing (QE) withdrawal - we ...

New home sales shine in U.S. recovery

Based on its internal dynamics, the U.S. economy continues to be one of the most attractive for investors. One of the key pillars of support for the U.S. economy has been ...

Fed's tapering talk may trigger more volatility

The Fed's comments in May and June about reducing its asset purchase program generated significant interest-rate volatility in the United States, changing the opportunity set for fixed-income investors. Spread sectors - ...

For bonds, think outside the index

For several decades, the Barclays U.S. Aggregate Bond Index (known as the Lehman U.S. Aggregate Bond Index until November 2008) has been a central reference point for bond investors - a ...

Higher rates are unlikely to detour convertibles

A common misperception of the convertibles market is that the returns of these securities are more dependent on interest rates than on other factors. Over time, data have suggested that convertibles


The views and opinions expressed are those of the speaker, are subject to change with market conditions, and are not meant as investment advice.