From Alec Phillips/Goldman Sachs today (not online):
…the Treasury bill market is clearly indicating concern about upcoming debt ceiling deadlines …
Category Archives: financial markets
Debt Ceiling Watch
From WSJ, a picture of rising risk perception surrounding a debt ceiling crisis:
The Absolute Funniest Thing I Have Read This Year
From Ed (We Are Not in a Recession) Lazear and Keith Hennessey, “Bush ended financial crisis before Obama took office — three important truths about 2008”, FoxNews (9/16):
Prescience, 2007 edition
Having coauthored an entire book on the financial crisis of 2008 (Lost Decades, with Jeffry Frieden) I think that one of the most important qualities for a policymaker is the ability to look forward, and assess potential dangers and understand why those dangers arise. Looking back to 2007, it’s of interest to see who foresaw the impact of adverse feedback loops in the financial system as risk was repriced.
The all-powerful Fed
The conventional wisdom is that the big jump in interest rates since the beginning of May is the result of a poorly conceived or poorly communicated shift in policy by the U.S. Federal Reserve. The conventional wisdom is wrong.
“Global Spillovers and Domestic Monetary Policy”
If QE1 through QE3 and other unconventional monetary policy (UMP) measures had little impact upon implementation, why did the hint of a stepback induce such large reactions in international markets?
The end of low interest rates
The yield on 10-year U.S. Treasury securities averaged 1.8% during 2012, the lowest levels in 60 years. But that episode may now be behind us.
The ECB’s OMT and the German Constitutional Court
The Outright Monetary Transactions (OMT) program undertaken by the ECB has been key in stabilizing sovereign yields in the euro area periphery. Helmut Siekmann and Volker Wieland have evaluated the (German) legal concerns surrounding the program, here.
Revisions in Expected Interest Rate Paths
There’s been a lot of discussion of upward movements in long term interest rates. I thought it useful to consider the revisions in expectations, over time, and in context.
It’s not just the Fed
The yield on 10-year U.S. Treasuries has jumped 50 basis points since the start of May, leading some to speculate that the market is already starting to price in anticipation of an end to the Fed’s bond-buying program. There may be some truth to that, but it’s only part of the story.