The Macro Report | October 2016
Signs of policy regime change
At the end of the third quarter, the global macro picture looked a bit better across quite a wide range of countries, both developed and emerging. While we do not view this as a fundamental change of direction, the global economy seems to be moving to the top of the recent range of economic growth, as our Global GDP Nowcast shows. While we see no reason to expect the economy will break out into a new, stronger growth trajectory, it is better to be at the top of a range than at the bottom.
Our Global Risk Appetite Index illustrates that, overall, September was a good month for risk assets. But the recent move up in interest rates raises a series of questions. Are we at the end of an era? Are rates about to move up sharply? How much will risk assets suffer once the paradigm shifts? In what follows, we explore these questions in the context of potential policy regime change underway in the United States, the United Kingdom, and Japan.
The end of unlimited support?
Global central banks are beginning to talk about the limits of policy and the need for complementary fiscal measures.
Stopping to think about Brexit
The enactment of U.K. political priorities may exact a high economic cost, but a new approach to macro policy may open the door to meaningful fiscal measures.
Japan on the helipad
The Bank of Japan’s “comprehensive assessment” of policy has led it to clear a path toward potentially radical fiscal change, including the government’s use of “helicopter money.”
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