Back to Zero

Ten year TIPS yields that is; the 10yr-3mo spread is 4 bps.

Figure 1: Ten year – three month Treasury spread (blue), and Ten year TIPS yield (red), both in %. Source: Federal Reserve via FRED, Treasury, and author’s calculations.

Have All Agricultural Commodity Prices Behaved As Did Soybean Prices?

That’s what reader sammy asserts, trying to support the proposition that Chinese retaliatory tariffs on imports of US soybeans had no impact on US soybean prices.

… chart of soybean prices there are a number of other commodity price charts, such as copper, wheat, coffee etc. They are unaffected by the tariff war yet are remarkably similar to the soybean chart.

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What a Trump Trade Victory Looks Like: Soybeans

Back in July 2018, reader CoRev wrote:

…no one has denied the impact of tariffs on FUTURES prices. Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.

Back on March 23rd, when Mr. Trump announced intent to launch Section 301 actions, nearest month soybean futures closed at 1028. Latest today is 902. Indeed, prices have been falling since Mr. Trump signed the much heralded (by some) Phase 1 deal. This is shown in Figure 1 below.

Figure 1: Front month soybean futures (black). Trump announces intent of Section 301 action against China (red), Section 301 tariffs and Chinese retaliation in effect (orange arrow), and Phase 1 deal signed (blue arrow). Source:

Front month futures prices are now 14% lower now, while the CPI is 2.2% higher (both in log terms). You can do the math. The “blip” is not over.

Manufacturing Employment Lags in Three Midwest States

Figure 1: Manufacturing employment in US (blue), and aggregate of Michigan, Pennsylvania, and Wisconsin (red), both in logs, 2018M12=0. December data preliminary. GM strike in October. Source: BLS, author’s calculations. 

Michigan, Pennsylvania and Wisconsin aggregate manufacturing employment 1% below peak. In contrast, nationwide manufacturing employment (total, including managerial) has been flat from September 2019.

Spot the Incipient Recession

Most accounts these days suggest the risk of recession has abated, given the strength of various indicators, and the un-inversion of the yield curve. This made me wonder what two key indicators look like in real time on the eve of a recession. Take a look at these two graphs, to see which one denotes data just before a recession.

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