The Macro Report | November 2017
Narrowing the range of risks
October marked another month of global expansion, and financial markets remained upbeat against a backdrop of low inflation. The European Central Bank announced it will reduce its bond-buying program starting in January, while the Bank of Japan remained on the dovish policy extreme. October was also a positive month for global risk appetite. Investor demand supported equities and non-gold commodities. In political developments, Chinese President Xi Jinping secured a second term in office and Japanese Prime Minister Shinzō Abe celebrated an electoral triumph in snap elections last month.
The U.S. impasse with North Korea has quieted recently to an exchange of threats on Twitter. These developments, along with the emerging tax plan in the United States and the nominee for Federal Reserve chair, resolved a set of uncertainties that arose in recent months. The questions that remain involve the course of inflation and how central banks are interpreting it. In Saudi Arabia, a recent corruption crackdown led to the arrests of many members of the business elite and the royal family. If this indicates that serious change is underway in the kingdom, we’ll have to rethink the geopolitics of the Middle East.
Asia stabilizes, mostly
President Xi and Prime Minister Abe renew their authority, the Korean standoff subsides, but Saudi Arabia takes a turn.
Europe tangos toward tapering
The European Central Bank plans to scale back its bond-buying program starting in January, but policy divisions persist between the doves and the hawks.
Wage inflation remains sluggish
Although the unemployment rate ticked lower, wage growth remained sluggish due to temporary effects of the hurricane season as well as long-term factors.
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