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