Pretty unique, in terms of size, and the combination of uninsured deposits and held-to-maturity securities. From the Economist:
Author Archives: Menzie Chinn
Recession Chances: Fed Pause vs. Banking Shock
Goldman Sachs raised the probability of recession from 25% to 35% in light of the SVB related turmoil (although their guess is still lower than the consensus). This prompted me to wonder what was the net effect of the turmoil and Fed response (less tightening) on economic activity.
Financial Market Integration Assessed
In a new paper prepared for the Handbook of Financial Integration, edited by Guglielmo Maria Caporale, Hiro Ito and I examine bond based measures of financial market integration (so, no quantity stock/flow measures, nor banking integration).
2018 Banking Deregulation and Randal Quarles
Rates, Break-evens, VIX & EPU, pre-CS/UBS
After last week’s financial turmoil, but before the CS/UBS deal, real rates and inflation breakevens were down, while risk and uncertainty indicators were up.
SVB, SIFIs, Dodd-Frank, EGRRCPA, HQLA and the LCR
One major question posed by recent events is whether the issues SVB faced would’ve been caught had EGRRCPA not been passed (which raised the threshold for what qualifies as a SIFI). Bill Nelson at the Bank Policy Institute has an illuminating post arguing that the liquidity coverage ratio (LCR), which would have applied to SVB had it been classified an SIFI, would not have been triggered. People like former Senator Toomey (a cosponsor of the 2018 act) have asserted that the LCR wouldn’t have caught SVB. Here’s the logic I think he, and others, is relying on.
Weekly Macro Indicators and Nowcasts on the Eve of SVB
Deceleration was still in place, according to the WEI.
“So China is now paying us billions of dollars in tariffs”
That’s economist Trump in 2018, as cited in Coy (2018). Now, from USITC “Economic Impact of Section 232 and 301 Tariffs on U.S. Industries” (page 22), a conflicting assessment.
The Commission’s econometric model estimates that tariffs under sections 232 and 301 resulted in a nearly one-to-one increase in prices of U.S. imports following the tariffs. This implies that a 10 percent ad valorem tariff raised the price of U.S. imports from China by about 10 percent. This nearly complete pass-through (meaning that prices received by exporters were largely unaffected and prices paid by U.S. importers increased by the same amount as the tariffs) is unusual but has been similarly found by other recent studies, which conclude that U.S. importers have borne almost the full burden of section 301 tariffs.
Back in the Real Economy: Business Cycle Indicators, Mid-March
With industrial production for February (0% m/m vs +0.2% Bloomberg consensus), we have the following picture of key indicators followed by the NBER BCDC, plus S&P Market Intelligence monthly GDP.
Oil Futures
Near month, over past two years: