The Macro Report | April 2017

Pillars of global growth

The Trump trade — the idea that President Trump’s economic agenda would push up the U.S. nominal growth rate — led to a few months in which the risk appetite line for the United States alone was practically vertical. Long Treasuries dropped sharply, and U.S. equities rose strongly. But more recently, this trade appears to have fallen out of favor as investors reconsider the domestic policy outlook.

As the Trump trade fades, the global reflation trade has begun to take over. In this story of widespread economic improvement, we see the United States simply continuing on its prior economic trajectory of slow and steady growth. This month, in addition to the United States, we take a closer look at Europe and Japan, two other sources and beneficiaries of global economic strength.

The stable U.S. trajectory

The stable U.S. trajectory

U.S. household nominal incomes are growing at a mostly steady but fairly slow rate, as the tightening labor market produces modest gains in wages.

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It’s harder to stay easy at the ECB

It’s harder to stay easy at the ECB

As growth waxes stronger in Europe, policymakers will intensify their debate over tightening versus accommodative policy. For now, the doves appear to hold sway.

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Stealth tapering in Japan

Stealth tapering in Japan

As Japan’s economy strengthens, markets will look for overt and subtle signs of monetary policy change at the Bank of Japan.

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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