Keeping an eye on Europe’s deflation risk
Should deflation emerge in Europe, it may pose a more difficult challenge today than in recent years.
Category: Outlook
Market outlook remains positive
Despite the end of QE3 and other sources of risk, Putnam’s market outlook sees attractive potential in stocks and in our diverse fixed-income strategies.
Inflation likely to pressure the Fed
The most pressing issue for global markets for the remainder of the third quarter will be the mounting challenge for the U.S. Federal Reserve to keep reinforcing its “optimal control” framework in the face of higher inflation data. Striking the right balance The Fed has a dual mandate under the law: to pursue policies that
Like the weather, the economy should warm up
The polar vortex that spread across great swaths of North America several times this past winter numbed economic data. One way to understand the impact of winter is to analyze heating degree days. These calculations measure the energy consumption required to heat buildings and appear on the monthly utility bills of many homeowners. Based on
The ECB relies on smoke and mirrors
In Europe, slow growth appears likely to continue, with some regional differentiation. Signs of strength in the south Spain is doing much better than it had been just 18 months ago, and even Italy looks somewhat healthy now that its political crisis has passed. Importantly, fiscal pressure in the form of austerity programs is slated
Why wages might rise
Unemployment continues to drop, but not because a lot of new jobs are being created, as many would hope. Instead, the unemployment rate is dropping primarily due to a declining labor participation rate. This remains a cause for concern for us because of what it could mean for inflation. The Fed, under Chairman Ben Bernanke,
Developed markets forge ahead
Emerging markets are vulnerable to the marginal tightening of U.S. monetary policy, we believe, caused by the reduction in bond purchases by the Fed. In December, the Fed announced it would reduce its $85-billion-per-month bond-purchase program by $10 billion beginning in January. Although the Fed describes the reduction as less accommodation — rather than marginal
Does an inflation surprise lurk in Fed stimulus?
Ever since the topic of stimulus tapering was aired in June, the Fed has hastened to clarify its message: We’ll taper if and only if the data argues for tapering. Generally unimpressed with the U.S. recovery since then, the tough talk on tapering has noticeably cooled. The gradual reduction of the Fed’s bond-buying program is
Consumer and business spending could lift stocks
U.S. GDP growth during the recovery, underway since the middle of 2009, is among the weakest in recent history. It has averaged a little over 2% for the past four years, well below the previous long-term trends of 3% to 3.5%. Amid this slow recovery, investors have been looking for the economy to shift to