Economy

What are JGBs Trying to Tell Us? March 23, 2023

Posted by Knowledge Leaders Team in Economy, News

Yields on 10-Year Japanese Government Bonds have fallen by about a third over the past two weeks, as shown in the chart below. Given the tumult surrounding banks recently, and a series of relatively dismal economic data releases out of Japan, this isn’t exactly surprising….

Fed’s Balance Sheet Balloons March 21, 2023

Posted by Knowledge Leaders Team in Economy

To shore up Silicon Valley Bank and the other failed banks, the Federal Reserve extended an open-ended line of credit via its Bank Term Funding Program (BTFP) and discount window borrowings. So far, this program has increased the Fed’s balance sheet equal to roughly half…

Credit Suisse’s Chickens Come Home to Roost March 15, 2023

Posted by Knowledge Leaders Team in Economy, News

The chart below demonstrates the multi-year decline in Credit Suisse’s business. Credit Suisse’s problems revealed today stem from issues the company discussed last June in a profit warning. Below is a chart of Credit Suisse’s assets under management discussed during that profit warning. According to…

Developed Asia Responds to Bank Troubles March 15, 2023

Posted by Knowledge Leaders Team in Economy, Markets

The fallout from the Silicon Valley Bank collapse and the continued troubles of other lenders has not been contained to the Western Hemisphere. Market implied policy rates for developed markets in Asia responded quickly and forcefully to fears of banking contagion from the US and…

CPI Confirms Fed is Close to Stopping March 14, 2023

Posted by Knowledge Leaders Team in Economy

Headline CPI came in today as expected at 0.4%, however core inflation (ex food and energy) came in slightly higher at 0.5% versus the estimated 0.4% increase. Before the Silicon Valley Bank failure and currently ongoing banking rout unfolded last week, Jerome Powell said he…

Fed Repriced Out of Action March 13, 2023

Posted by Steven Vannelli, CFA in Economy, Markets, News

We just experienced the fastest bank run in history with the closure of Silicon Valley Bank. Apparently over 40% of the company’s deposits fled last Thursday and early Friday before closure. To put this is context, when Continental Illinois—at the time, the largest ever bank…

European Markets Grapple with Nagging Reality February 23, 2023

Posted by Knowledge Leaders Team in Economy, Markets

Investor concerns over the potential for poor European growth in the foreseeable future have eased thanks to the flurry of economic data coming out stronger than expected this year. That same data though has led investors to again fear what they thought was behind them…

Japan’s Non-Inflation Scare February 22, 2023

Posted by Knowledge Leaders Team in Economy, Markets

The Japanese Government Bond 10-year breakeven inflation has run contra to recent worldwide trends as one of the few sovereign rates of its kind to decline year to date. Where the rest of the world has moved on from a “growth scare” to an “inflation…

Fed’s Policy Path Back in Center of Attention February 22, 2023

Posted by Knowledge Leaders Team in Economy, Markets

Investors’ fears over a slowing US economy have seemingly been replaced with renewed fears over inflation and the possibility of a more hawkish stance by the Federal Reserve. Despite progress on lower goods inflation and signs that economy was cooling in December, price pressures have…

Mid-Quarter Update: The Globalization Myth February 17, 2023

Posted by Steven Vannelli, CFA in Economy, Markets

The common narrative is that we’ve (the US) been enjoying a long period of globalization and now that it is going into reverse, it will upend many of the benefits brought by globalization, to the US in particular. We think this is the wrong way…

Chinese Demand Buoys Outlook for its Neighbors February 03, 2023

Posted by Knowledge Leaders Team in Economy

With Caixin China PMI numbers today broadly confirming Monday’s official CCP data, the outlook for China and its neighbors remains bright. The general trends shown in the Caixin PMIs reflect those of Japan and South Korea. Manufacturing held steady or gained slightly across Asia in…

Regional Differences in European GDP Trends February 01, 2023

Posted by Knowledge Leaders Team in Economy

On Monday, Germany’s GDP print for the final quarter of 2022 came out below expectations of 0.0% by -0.2%. This negative (rather than stagnant) figure makes the -0.5% print forecast for Q1 2023 a more foreboding prediction for Germany’s economy. France’s expected GDP for Q4…

Is the Fed Winning the Inflation War? January 31, 2023

Posted by Knowledge Leaders Team in Economy

In anticipation of tomorrow’s rate decision, we saw another indicator today that the Federal Reserve has been successful in stemming the tide of inflation. The Employment Cost Index for the fourth quarter of 2022 came in under expectations at 1% quarter-over-quarter, or about 4% annualized….

Japanese vs. South Korean Exporters in China’s Great Reopening January 30, 2023

Posted by Knowledge Leaders Team in Economy

South Korea and Japan are the top two source nations for Chinese imports respectively, and generally they export the same kinds of manufactured goods. With the expected explosion in demand from China’s reopening, both countries stand poised for a trade windfall. However, we could see…

China Reopening an Insignificant Factor for Germany So Far January 25, 2023

Posted by Knowledge Leaders Team in Economy

Yesterday, we got our first look at December’s economic data for Europe, in the form of PMIs. It is also our first look at any data related to trade and the China reopening. In light of the reopening, lets delve into China’s number one European…

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