The Macro Report | May 2019

Central banks walk growth tightrope

Global economic growth in 2019 is showing signs of picking up amid recovery in the eurozone and China, the world's second-largest economy. The prospect of a deeper slowdown in China has been one of the biggest concerns for the global economy this year. The U.S. economy, while outperforming other developed countries, will sputter along as the fiscal stimulus fueled by tax cuts wanes and investments slow. Despite some improvement in the data flow, we expect to see headwinds from trade, interest rates, market volatility, and fiscal policies.

The Federal Reserve's policy switch, meanwhile, continues front and center in the markets. Many global central banks have turned more dovish on interest rates, and Wall Street has hung on to every word Fed chair Jerome Powell uttered this year. Powell faces a tricky task as some of his comments have fueled the idea that there is a Powell "put" — that the Fed under his leadership will act like an option contract to prevent stocks from falling too much. Over in Japan, the central bank continues to struggle with low inflation and limited monetary policy options.

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The growth cycles

The growth cycles

Global economic growth is showing some tentative signs of recovery as the eurozone and China post GDP numbers that beat market expectations.

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The Powell

The Powell "put"

The Fed's dovish stance on interest rates has some on Wall Street betting that the central bank will rescue the economy from a possible recession.

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Chasing inflation in Japan

Chasing inflation in Japan

The central bank is struggling with stubbornly low price gains, leaving it with little flexibility in pursuing monetary policy options.

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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, 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 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