The Macro Report | January 2020
Waiting for the next wave of growth
We believe the global economy will continue to bounce around the current growth pace. Trade, manufacturing, and oil, along with geopolitical risks, will play a role in determining the trajectory. The dramatic drone strike that killed Iranian general Qassem Soleimani in January propelled the United States and Iran to the brink of war (and back) and roiled financial markets. The standoff between President Trump and Iran’s supreme leader Ayatollah Ali Khamenei also caused fluctuations in the volatile oil markets. Crude prices surged after the attack in anticipation of a response from Iran that would disrupt Middle East oil flows.
Slow growth continues to exert pressure on the eurozone’s politics. Spain has a precarious, new coalition made up of center-left and hard-left parties after Prime Minister Pedro Sánchez broke nine months of gridlock in forming a government. Britain will leave the European Union on January 31 three-and-a-half years after the Brexit referendum. There will be a transition period until the end of 2020. And China’s policymakers have sanctioned more measures, including a new loan prime-rate system, in response to economic malaise.
Oil tracks U.S.–Iran tensions
Crude prices are holding steady — after briefly soaring to a more than 3-month high in the aftermath of the assassination of a top Iranian general — amid ample supply and dissipating war fears.
The global growth outlook is little changed as U.S. economic risks skew to the downside and Europe grapples with waning voter support for center-left socialist parties.
About the macro report
The Macro Report is written by members of Putnam’s Fixed Income team. With backgrounds in applied economics, currency and interest-rate analysis, and sovereign and local bond market dynamics, this group conducts macroeconomic research in support of Putnam’s global fixed-income strategies.
Michael Atkin, Head of Macro & Sovereign Credit
Investing since 1988
Sovereign debt, global growth analysis
Albert Chan, CFA, Head of Portfolio Construction
Interest-rate derivatives, government debt, risk analysis
Onsel Gulbiten, PhD, Analyst
Inflation, risk analysis, global growth dynamics
Sterling Horne, Analyst
Politics and economics
Irina Solyanik, CFA, Analyst
Quantitive analysis, growth forecasting
Izzet Yildiz, PhD, Analyst
Labor market analysis, global growth dynamics