The Macro Report | November 2016

The deepening of policy uncertainty

On November 8, 2016, Donald Trump continued his remarkable journey, securing an electoral victory that seemed highly improbable in the weeks prior to the election. Moreover, the Republican Party benefited from his strong showing, holding on to a majority in the Senate and the House. Early in 2017, Republicans will control all the levers of U.S. political power.

In our view, it is clear that global markets were not priced for this outcome, and the immediate reactions were violent — but, in many cases, markets just as swiftly reversed course. While it is hard to be confident about what comes next, we venture a few observations this month on U.S. policy trajectories, populist political momentum in Europe, and key risks building in China.

The United States changes course

The United States changes course

Under a Trump administration, how will the government balance macroeconomic policies that support growth against policies that restrain it?

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Hawks circle at the ECB

Hawks circle at the ECB

The risk of an ECB policy mistake could be rising, even as populist political momentum continues to build across Europe.

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Knee deep in debt in China

Knee deep in debt in China

Emerging markets may be pushed to the precipice by U.S. political change while China’s debt problems continue to grow.

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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