The Macro Report | March 2018

Cross currents in global markets

February saw a sharp reversal in risk appetite as investors shifted out of global equity and bond markets. Evidence of economic strength, including a tight labor market and rising wages in the United States, drove Treasury yields higher. The wage growth in January fed market fears about inflation and raised concerns that the Federal Reserve will quicken the pace of interest-rate hikes in 2018. Since then, calm has somewhat returned to Wall Street.

Markets are also absorbing the recent flurry of global economic and policy news. The budget deal ushered in by the U.S. Congress is expected to benefit economic growth. However, recent steps toward protectionist trade policies create downside risks to this outlook. President Trump slapped tariffs on aluminum and steel imports, weeks after announcing tariffs on washing machines and solar panels. In China, President Xi Jinping’s supporters succeeded in lifting a constitutional provision on the length of time he can serve.

Risk appetite wanes

Risk appetite wanes

Global markets tumbled as concerns about inflation and higher interest rates drove investors to pull out of equities and bonds.

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New era in U.S. fiscal stimulus

New era in U.S. fiscal stimulus

The budget deal clears the way for Congress to increase spending on a variety of programs, including infrastructure.

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China’s new emperor

China’s new emperor

Changes in the president’s term limit could lead to capital misallocation and risks in the financial system.

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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