The Macro Report | February 2020
Virus clouds fragile growth
The Wuhan coronavirus poses a risk to China's economy over the short term, and there will very likely be some effects on global growth. Federal Reserve chairman Jerome Powell has said the outbreak presented a "new risk" to the economic outlook for the United States. Financial markets are still assessing the fallout from the deadly virus amid disruptions to businesses and as Chinese cities remain under lockdown. A prolonged epidemic could have a lasting impact on global economic prospects.
Against this backdrop, there is ongoing tension in the current configuration of monetary policy, economic performance, and asset valuations. Investors continue to look to the Fed for direction, especially after policymakers lifted the interest on excess reserves rate (while holding the benchmark policy rate). In Europe, the U.K. formally left the European Union on January 31, closing the chapter on a nearly 50-year relationship with its neighbors. Securing a new trade agreement will be a top priority for Prime Minister Boris Johnson in the coming months.
Mapping the virus toll on China
The coronavirus poses a risk to China's growth as the government races to contain the outbreak, and the global economy could suffer from disruptions in business activity.
Markets look to the Fed
It is through the financial markets that monetary policy affects the real economy, and central banks such as the Fed play a key role in fueling investor expectations.
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, Portfolio Manager
Investing since 1988
Sovereign debt, global growth analysis
Albert Chan, CFA, Portfolio Manager
Interest-rate derivatives, government debt, risk analysis
Onsel Emre, 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