…under decades of failed leadership, the United States has gone from being the globe’s manufacturing powerhouse — the envy of the world — through a rapid deindustrialization…
The yuan is sliding against the dollar. What about against other currencies?
Among the many promises made by President Elect Trump, one was to declare China a currency manipulator on his first day in office. Besides the logistical difficulties of doing so without a Treasury Secretary in place, there are the minor difficulties of what the data indicate (I know, I know, facts seem of little import these days, but what the heck). In addition to the legally defined concerns Brad Setser has raised, I think it is useful to assess China’s currency using a commonly used measure of currency misalignment.
Last week I puzzled over the response of financial markets to the U.S. election. Since the election, the S&P500 is now up 3%, the dollar is up 4.6% against the euro, and most remarkable of all, the 10-year Treasury rate has gone up 50 basis points. Here I offer some further thoughts on the last development.
I was astounded not only by the outcome of the U.S. presidential election but also by the response of financial markets.
In short: Rural areas will not like what they get from a combination of expansionary fiscal/counter-cyclical monetary policy.
Figure 1: Daily economic policy uncertainty (blue), and centered 7 day moving average (red). Source: PolicyUncertainty, accessed 14 Nov 2016, and author’s calculations.
Today’s value (sure to be revised) exceeds that recorded on 9/18/2001, the previous high in the sample running from 1985 to today.
Three papers of interest on the effects of U.S. trade policy on manufacturing employment, racial discrimination, and the Chinese real estate boom.