The Macro Report | October 2018

Tweets and trade tensions

The outlook for global economic growth is easing because of trade tariffs, weakness in emerging markets, and rising oil prices. In the United States, growth will remain steady this year but is expected to slow in 2019 as the fiscal stimulus abates. The United States, Mexico, and Canada reached a new trade deal that is a lot like NAFTA but with a few upgrades (and a few concessions). The United States-Mexico-Canada Agreement (USMCA) increases dairy exports from the United States to Canada and improves protections for workers in all three countries.

The story isn’t so encouraging for China or Italy. The United States and China continue to be locked in a spiraling trade war. Policy makers in Beijing stepped up efforts to ease monetary policy to lift growth in a slowing economy as the trade conflict intensifies. China’s hopes of negotiating a free trade pact with Canada or Mexico were dealt a setback by a provision in the USMCA that aims to forbid such deals with “non-market” countries. Meanwhile, Italy’s ballooning debt levels and an unstable coalition government are weighing on the European Union (EU) and global markets.

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