The Macro Report | October 2017
Harmonious growth in a discordant world
Against a backdrop of continued political challenges around the world, the global economy continues to do well and markets seem more encouraged by the growth than they are disconcerted by the political volatility. We are a little more optimistic about the outlook. Regarding politics, the re-emergence of Spanish risk is one indication of the resilience of the nationalist impulse, and it’s hard to be optimistic about the prospects for growth-enhancing tax reform in the United States, though tax cuts are a different story.
At the same time, we are seeing signs of some risks easing. In particular, the Trump administration has made decent progress in thinking about the Fed and its leadership, and the individuals named on the short list, apparently now on Trump’s desk, are almost without exception well qualified. The risk of appointing an outsider who might try to change Fed policy dramatically seems a lot lower now. Some of the names lean hawkish, but any of them would run the Fed in the manner to which we have become accustomed.
Currencies part as growth synchronizes
As central bank policies diverge, watch for greater movement in currencies than interest rates.
Penciling in a tax cut
The latest set of Republican tax proposals faces significant opposition, but just enough of them should survive to lift growth a bit in 2018.
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