Five year Treasury-TIPS breakeven rises. EPU up on 13th, VIX down (but still elevated) today. 10yr-3mo spread remains very negative.
Author Archives: Menzie Chinn
Inflation Surprise Barely Moves Expected Fed Funds Path
M/M core CPI inflation surprised on the upside (0.5 ppts vs. 0.4 ppts Bloomberg consensus) while m/m headline at consensus. The path of the Fed funds as indicated by futures barely budged.
The Term Spread and Recession, Across Countries
World of Government Bonds has this interesting page which notes all the inverted yield curves. Shown below are those for S&P ratings of A to AAA as of today.
Economists in Favor of Banking Deregulation, 2017
Before the The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, what economists/analysts were in support of a loosening of requirements.
Guest Contribution: “Some Thoughts on SVB”
Today, we present a guest post written by Charles Engel, Donald D. Hester Distinguished Chair in Economics at UW Madison.
Financial Deregulation: Thanks, Trump
On banking regulation, from Forbes:
Thanks to Trump and his supporters this [Dodd-Frank capital and liquidity measures] all changed. Some of the key changes that EGRRCPA made were:
- Increasing the asset threshold for “systemically important financial institutions” or, “SIFIs,” from $50 billion to $250 billion.
- Immediately exempting bank holding companies with less than $100 billion in assets from enhanced prudential standards imposed on SIFIs under Section 165 of the Dodd-Frank Act (including but not limited to resolution planning and enhanced liquidity and risk management requirements)
- Exempting bank holding companies with between $100 billion and $250 billion in assets from the enhanced prudential standards.
- Limiting stress testing conducted by the Federal Reserve to banks and bank holding companies with $100 billion or more in assets.
How Have Market Expectations of the Fed Funds Path Changed?
Comparing CME implied Fed funds for the March 22 and May 3 meetings shows a downshift, which seems attributable to developments surrounding SVB.
“China Signals Stability With Surprise Move to Keep PBOC Governor”
SVB – No One Should be Surprised
SVB was a collapse waiting to happen. One indicator is the increasing reliance on debt acquired on the capital markets (as opposed to deposits).
Looking Backward to the “Recession of 2022H1” and Forward to the Recession of 2023
Ever wonder whether vehicle miles traveled (VMT) does a good job of predicting recessions? You should’ve stopped after looking at this Econbrowser post from January 4th, but I thought an update to most recent data would be of interest as we obtain December data. First take a look at what VMT does over recessions, versus heavy truck sales (suggested by Calculated Risk at some points), and the eponymous Sahm Rule (real time version).