The Macro Report
Timely macroeconomic insights on the global economy, fixed income markets, currencies, and policies
November 16, 2023
Sticky inflation is likely if there is no recession
Trends from the labor market and continued wealth imbalance are setting the stage for sticky inflation. Read the October Macro Report.
Fed's quantitative tightening (QT) will face constraints
The Fed is pursuing QT while being careful to avoid market disruption. Compare scenarios for QT and markets in Putnam's Macro Report.
The debt ceiling is raised, but the debt problem persists
As inflation sticks around, it is important to think about how it is related to high government debt.
Contracting money supply poses risk to bonds
A contracting money supply paired with the Fed's quantitative tightening is adding bank sector stress on Treasury and MBS markets.
Economic imbalances could mean deep recession or sticky inflation
A deep recession could have a significant impact on financial markets.
Inflation demands Fed's focus as bank lending tightens
Even as bank lending tightens, the Fed may still need to keep rates high for longer to bring down inflation.
Fed walks a line between inflation and financial stability
Given the fragilities in financial markets, the Fed will likely move cautiously in monetary tightening to fight inflation.
What the Silicon Valley Bank Collapse Means for Powell and Fed Policy
Silicon Valley Bank's collapse and the public's shaken faith in the banking system may affect what the Fed is willing to try to curb inflation. Learn more today.
Will interest rates go down?
Our base case for our strategy remains that a recession will wipe out excess savings, and the relatively low interest-rate environment will return.
U.S. recession outlook as China reopens
We outline possible scenarios for inflation and recession in the year ahead and how global forces play roles.
Where to watch for job losses, by sector
Young businesses are a major source of employment, a key variable determining the economic cycle.
Expect a pause, not a pivot, as savings fuel spending
In the coming months, the Fed will not likely pivot but pause and wait with a high level of rates for convincing signs of disinflation.
High job openings signal wage-price spiral
Limited labor supply, higher wages, and a high staff turnover seems to have initiated a wage-price spiral.
Covid-related labor imbalances complicate Fed's inflation fight
Demographic shifts and labor imbalances might have disturbed consumption-saving decisions that impact inflation.
Cracks emerge in Europe's resilience
Recent economic data and the outlook for energy supplies are casting doubt on whether Europe has the resilience to withstand a recession.
U.S. recession ifs and whens
The U.S. will likely avoid a recession in 2022, in our view. That risk rises next year as the Fed raises rates and China decelerates.
U.S. households and asset prices are at tipping point as Fed lifts rates
In a supply-constrained world, reducing asset prices may be the only way for central banks to bring demand and inflation lower.
China sets ambitious growth target despite new lockdowns
China boosts fiscal spending to support its growth target in 2022 amid lockdowns in Shanghai and other cities.
Oil prices face downside risk
We expect oil prices to enter a correction stage and for Russia’s war in Ukraine to play less of a role in oil markets.
Russia-Ukraine War could slow global growth
The war and widespread sanctions will likely have a knock-on effect on economic growth, inflation, interest-rate policies, and the future of renewable energy.
Oil prices may correct after sanctions-related spike
While the Ukraine conflict and sanctions on Russia have lifted oil prices higher, current prices may be temporary.
Emerging markets walk a fine line
Emerging market assets — especially currencies and bonds — have proved to be resilient amid the Russia-Ukraine conflict, rising interest rates and Omicron.
Oil: From sizzle to fizzle
Oil prices have rocketed to seven-year highs. But we have a bearish view because current prices are unsustainable.
Precautionary stockpiling and its impact on growth
Companies are buying raw and intermediate goods at a record pace, which will influence economic growth in 2022.
How could the yield curve impact risk assets in 2022?
The Fed's policy changes will have implications for the U.S. Treasury market and other financial assets.
The Fed’s conundrum — $7 lattes, $5 gas, 0% interest rates
We believe the Fed is likely behind the curve in containing inflation with ultra-low interest rates.
$100 oil may be a pipe dream
Oil prices have risen to multi-year highs on surging demand, tight supply, and the crunch on natural gas. We believe it is time to question the current rally.
Regulatory storm sweeps across China
President Xi Jinping's “common prosperity” campaign to address China's wealth gap has converged with the regulatory crackdowns.
Markets see living with Covid-19 as the new normal
Global financial markets might be pricing in a “living with the virus” environment and are adjusting to a lower growth path.
U.S. labor market — 55 is the new 65
Following broad-based recovery in the labor market when the economy initially reopened in 2020, the labor force participation rate has stagnated and started to diverge.
Pandemic takes toll on emerging market finances
New mobility restrictions will be a drag on emerging economies, but we expect the impact will be less severe than during the first wave of the pandemic.
Toys, cars, and the U.S. recovery
We believe growth in the United States remains strong, but expectations need to be revised lower.
Oil makes a comeback as demand rises
Oil demand is likely to rise amid a stronger outlook for the United States, China, and Europe.
Fiscal impetus and the U.S. labor market
We examine the interplay between President Biden's multi-trillion-dollar stimulus plans, the labor market, and corporate profits.
China focuses on growth today and on tech for the future
China's ambitious five-year plan calls for self-sufficiency in technology and quality domestic growth.
Economic recovery, European-style
We believe Europe's economic activity can remain in expansion and perhaps even surprise on the upside in the second quarter.
From V-shaped recovery to bond vigilantes
The Federal Reserve remains dovish on monetary policy as bond market vigilantes push yields higher.
Green shoots in Japan's economy
Japan's economy, the world's third largest, will likely accelerate in mid-2021 as vaccine rollouts gather steam.
U.S. consumers flush with cash could drive temporary inflation
An easing pandemic and rising consumption will buoy U.S. growth, and potentially inflation.
Rising yields and mixed recoveries in emerging markets
The broad outlook for emerging markets has improved as vaccinations gather pace, but higher global interest rates will create headwinds.
Oil prices rally as supply dwindles
OPEC+ will be the key determinant for near-term oil prices as the outlook for global demand improves.
Global economic recovery hinges on vaccine success
Vaccine supply and efficacy rates will be important factors for a return to pre-pandemic global activity.
Is inflation poised to return?
We believe that pandemic-related bottlenecks have temporarily lifted U.S. inflation. Still, the underlying inflation trend is weak.
China's economy pulls ahead
China’s economy is rebounding and the virus spread remains mostly under control.
U.K. starts new chapter after EU split
It is strategic for the U.K. to have a trade deal with the EU given the short- and long-term negative effects of Brexit.
Vaccine-led recovery could boost emerging markets
The pace of economic recovery will differ among emerging markets, depending on COVID-19 vaccines and virus trends
Vaccine not in time for jobs recovery
The U.S. labor market continues to lose steam as fewer Americans were able to find work amid surging Covid-19 cases.
Oil markets pin hope on vaccine and OPEC+
Oil prices are likely to trend slightly higher as OPEC+ mulls maintaining lower output in 2021 and demand recovers in key markets such as China.
Calls for new stimulus as recovery fizzles
Governments are trying to calibrate their policies to support growth as “fiscal cliffs” loom amid a resurgence in the virus.
U.S. politics amid virus surge
U.S. election politics are playing out against a backdrop of an easing recovery, rising COVID-19 cases, and a potential new vaccine.
China leads, other emerging markets lag
China is leading the economic recovery among emerging-market countries, buoyed by stimulus and stringent COVID-19 measures.
Pandemic persists in policy patchwork
Fiscal and monetary policies will be central to the economic recovery between now and the availability of a COVID-19 vaccine.
U.S. economy remains a centerpiece in 2020 vote
Fiscal policy will be a key focus for investors after the November election.
The global economy and the race for a vaccine
The development of a vaccine will play a role in shaping the global economic comeback in 2021.
Keeping Japan's economy afloat after Abe
Prime Minister Shinzo Abe's resignation raises questions about the future of Abenomics and reform in Japan.
The Fed’s flexible new policy
The Fed announced a shift in its approach to monetary policy and the new strategy can be viewed as a flexible form of average inflation targeting.
V-shaped recovery proving elusive
The U.S. and global economic recoveries are unlikely to be “V-shaped” as businesses and consumers remain wary of returning to pre-pandemic behavior.
Vaccine is a wild card for the economy
A vaccine for the coronavirus will be supportive of risky assets even if the economic benefits take longer to materialize.
Risk sentiment swings with Fed tapering
Without a proactive Fed, the rally in risk assets would be in trouble.
Europe displays rare unity over relief fund
In a step toward closer ties, European Union leaders plan to discuss a recovery fund for countries hardest hit by the pandemic.
U.S.–China war of words playbook
The politics of the U.S.–China relationship have clearly become more complicated recently. The war of words over China’s handling of the coronavirus outbreak and the proposed new Hong Kong security law has the potential to create headwinds for the global economy and financial markets.
U.S. economic fog lifts slightly
It is encouraging that some stabilization has started in the United States and the economic data fog is lifting just a little; but we forecast a low probability of a "V-shaped" recovery.
Putnam Global GDP Nowcast
Putnam Global Risk Appetite Index
ABOUT THE MACRO REPORT
The Macro Report along with the GDP Nowcast and Risk Appetite are produced by 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.
Onsel Gulbiten, Ph.D., CFA, Director, Global Macro Strategy
Inflation, risk analysis, global growth dynamics
Albert Chan, CFA, Head of Portfolio Construction
Interest-rate derivatives, government debt, risk analysis
Sterling Horne, Analyst
Politics and economics
Izzet Yildiz, Ph.D., Analyst
Labor market analysis, global growth dynamics