/institutional/perspectives/macroeconomic-research/10-macro-themes-to-watch-in-2017

10 Macro Themes to Watch in 2017

Ten charts illustrate the global macroeconomic trends most likely to shape the investment environment in 2017 and beyond.

January 23, 2017


Highlights

Scott Minerd, Chairman of Investments and Global CIO, and our Macroeconomic and Investment Research Group analyze in 10 annotated charts the global macroeconomic trends we believe are most likely to shape the investment environment in 2017. Among our major themes:

  • The combination of tax cuts and infrastructure spending under a range of fiscal stimulus plans—including the Trump campaign proposal—will boost GDP growth, but the impact will be determined by the size, scope, and timing.
  • We expect three, possibly four, rate hikes in 2017, which will result in a yield curve flattening. A barbell portfolio strategy is appropriate for this kind of market.
  • Thanks to improving oil prices, easier lending conditions, and stronger economic growth, the high-yield corporate default rate will fall to 4 percent in 2017, a level below the 25-year average. Investors should maintain exposure to leveraged credit.
  • Oil will rise but average less than $60 per barrel, the unemployment rate will fall below 4 percent, and inflation will be contained.

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