Spreads relative to 3 months continue to decline.
Source: BondSuperMart.com. On the run yields.
Deciphering Figure 1-6 in the 2019 Economic Report of the President
What the heck? Here’s what the Trump-Hassett CEA reports in February.
Source: ERP, 2019, as edited by MDC (orange arrow).
Seven (Business) Days in May
[updated 6/3] Undervalued currencies as countervailable subsidies, tariffs on Mexico, flash mfg PMI drops, Drumpf again insists China pays US tariffs…so the yield curve inverts!
Figure 1: [Updated 6/3) Treasury 10yr-3mo spread (blue, left scale), 10yr-2yr (red, left scale), 5yr-3mo (teal, left scale), in %; 6/3 interest rates on-the-run at 1:30PM EST, and Economic Policy Uncertainty index (black, right scale). Source: Fed via FRED, US Treasury, and policyuncertainty.com, accessed 6/3/2019.
Yield curve inversion
The gap between long-term and short-term interest rates has narrowed sharply over the last year and is now dipping into negative territory. Historically that’s often been a signal that slower economic growth or even an economic recession could lie ahead.
Gap between average interest rate on 10-year Treasury bond and 3-month Treasury bill during the last month of the quarter (1953:Q2 to 2019:Q1) and May 1-24 for 2019:Q2. NBER dates for U.S. recessions shown as shaded regions.
Continue reading
The Left Coast Ensemble Presents “Artemisia”
The world premiere (in chamber version) of the opera composed by Laura Schwendinger, libretto by Ginger Strand with the Left Coast Ensemble. Update with review by SF Classical Voice.
Why I Am Shopping for Clothes (I Hate Shopping!)
From Spencer Hill/Goldman Sachs “US Daily: Company Views on the Return of the Trade War” [not online].
The “Blip” Continues! Soybean Edition
A year ago, the July 2019 futures were $10.46, compared to $8.296 today.
Reader CoRev writes on July 9th:
…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.
Guest Contribution: “The Trade War Resumes “
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate on May 23rd.
National Security Motivations for Protection, and Agricultural Policy Determinants
Given recent developments in the use of Section 232 in steel, aluminum, possibly uranium and automobiles, as well as the increasingly expensive bailouts of the ag sector, it behooves us to see some earlier perspectives on the use of such protectionist and interventionist measures, as provided by Peter Navarro.
A Primer on Misalignment (You’ll Need It If Peter Navarro Has His Way)
Today’s Bloomberg article notes that my one-time coauthor Peter Navarro has pushed to have countervailing duty (CVD) investigations augmented with assessments of currency unvervaluation. A prominent target of CVD investigations has been China.
Figure 1: USD/CNY bilateral nominal exchange rate (blue, left inverted scale), and real trade weighted (broad) value of the CNY (red, right scale). May 2019 observation is for first 20 days. Light orange denotes Trump administration. Source: Federal Reserve via FRED, BIS.