As the date of the resolution of the US-China trade dispute drifts further and further — perhaps past the 2020 elections according to Mr. Trump — it behooves us to look at what soybean futures contracts for September 2019 indicated as of Trump’s announcement of Section 301 action against China ($10.30 bushel on 3/22/2018) vs $8.67 today (Sept. 2019 is the front month future for soybeans now).
Does the Safe-Haven Aspect of the US Explain Declining Treasury Rates
That’s what reader Ed Hanson surmises:
Why are long term interest rate coming down. There is one obvious answer. The world sees the US as the safest and best place to invest with their bond holdings because of rigorous US economy brought on by the Trump administration with its tax and reduced regulation policy. Perhaps it is this circumstance of inversion that means it is not indicating recession, at least for the US.
Just glance at today’s Economist for an alternative interpretation:
Key Business Cycle Indicators, August 15th
Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink bold), all log normalized to 2019M01=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (7/25 release), and author’s calculations.
Implications of Yield Curve Flattening for the UK
Wall Street Haruspicy Watch
Do Tariffs Matter? Soybean Edition
A year ago, there was some debate (e.g., S. Kopits) whether tariffs on US soybeans would have any impact on US soybean exports — that is since soybeans were highly substitutable, US soybean exports would be redistributed w/o an impact on prices.
From Deutsche Bank today:
10yr-3mo Spread Barely Budges as 10yr-2yr Approaches Zero
This despite Trump’s temporary delay on additional China tariffs.
Teaching Begins Early This Fall: News, Efficient Markets Hypothesis, Asset Prices
Figure 1: September 2019 corn futures, accessed 8/13/2019. Source: Barchart.com.
Term Spreads Plumb New Depths as Long Yield Drops
A picture is worth a thousand words.
Guest Contribution: “RMB reaches 7.0; US names China a manipulator”
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 August 9th.