Corporations (non-financial) in the United States have $6.2 trillion in debt and debt has doubled in the past decade,
- The total trade surplus for the European Union increased from €15.6 bn in Q1 2017 to €19.1 bn in Q1 2018, total exports were €1.34 trillion and total imports were €1.33 trillion
- 10 of the 28 European Union countries had a trade surplus in Q1 2018 and 18 had a trade deficit
- Germany had the largest trade surplus in Q1 2018 at €62.2 bn, Netherlands at €15.8 bn and Ireland at €12.4 bn
- The United Kingdom had the largest trade deficit in Q1 2018 at €41.1 bn, France at €21.2 bn and Spain at €7.9 bn
The U.S. unemployment rate is at an 18-year low,
Emerging Markets are being routed with rising oil and a soaring US dollar
Here is the performance of the US dollar against emerging market currencies (figures in brackets are 1-month % change),
USD/MXN – Mexico 19.9450 (+8.17%)
USD/INR – India 67.9850 (+3.23%)
USD/TRY – Turkey 4.4894 (+10.07%)
USD/BRL – Brazil 3.7375 (+10.33%)
USD/ZAR – South Africa 12.7550 (+6.71%) Continue reading “Weekly Overview: Emerging Market Rout; New Italian Government; Japan GDP; Oil surge continues”
We recently wrote about the impact of rising interest rates for UK households, read more about it here. We also wrote about the impact of higher bond yields for the US government, read more about it here.
Impact of higher interest rates for the UK Government
The UK government has around £1.72 trillion in debt and pays around £36 billion in interest payments a year (an effective interest rate of 2%).
The UK tax revenues are around £800 billion a year, which would mean 4.5% of all tax revenues are paid as interest. The UK has paid £540 billion in interest since it last ran a surplus in 2001.
Historically, just a single currency has played a dominant role globally.
Historic global trade currencies
The silver Drachma issued by ancient Athens in the 5th Century B.C. was most likely the first currency that was widely circulated.
The gold Aureus and silver Denarius coins issued by Rome were next and they were the dominant currencies from 1st Century B.C. to 4th Century A.D.
Inflation caused major devaluation of the Roman-issued currencies, causing them to become increasingly less accepted making way for the Byzantine Empire’s gold Solidus coin to become the dominant currency in international trade from the 5th Century to 6th Century. Continue reading “A brief history of global trade/reserve currencies”
US and emerging market bond yields
The US 10-year bond yield soared to 3.09% today (up 75 bps over the past year and 25 bps over the past month), the highest since 2011. The 2-year yield hit 2.59%, the highest since August 2008 (read more here on the financial impact of rising yields for the US Government).
The bigger story is of emerging markets though. Brazilian and Indian 10-year yields have soared 33 bps in just a week. The Brazilian 10-year bond yield topped 10.12% while the Indian 10-year bond yield topped 7.91%. The US dollar has gained 7% against the Brazilian Real and 4% against the Indian Rupee over the past month.
Canadian bond yields are soaring the most amongst developed nations with the 10-year yield hitting 2.51%, up 94 bps over the past year and 24 bps over the past month. Continue reading “US and emerging market bond yields soar; UK retail; US Student debt; German GDP”
Healthcare could be the largest personal consumption expenditure of households in the U.S. within months exceeding spend on Housing and utilities.
Households in the U.S. are likely to spend some $2.45 trillion this year on healthcare. The spending on healthcare is quickly catching up with the largest expenditure item – Housing and utilities. Here are charts,
Baltic Dry Index
The Baltic Dry Index is a trade indicator that measures shipping prices of major raw materials and is often seen as a global growth indicator.
Over the past month, it has zoomed 48%. It is up 45% over the past year and is up 8% since the start of the year. This despite weaker US, UK and France Q1 2018 GDP growth. The Baltic Dry index generally falls in the first quarter on back of lower trading activity due to the Chinese New Year but this time it hadn’t recovered until very recently.
Here is a chart of the index over the past month,
From the Federal Reserve’s definition of Money Velocity and Money Supply,
The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy. Continue reading “The curious case of low U.S. money velocity”