Why wouldn’t it be?
We recently wrote about the UK household savings ratio falling to a record low of 4.9% in 2017 (since comparable records began in 1963) as growth in households’ spending exceeded the growth of households’ income. (Read more here).
We also wrote about the household savings rate in the US falling to a multi-year low of 3.1% as household expenditure grew quicker than income (Read more here). Continue reading “Household saving rates are falling globally”
Q1 2018 GDP
The US, the UK, France and Spain all reported GDP numbers over the last week.
US real GDP increased at an annual rate of 2.3% in the first quarter of 2018 as per an advance estimate released by the Bureau of Economic Analysis. Read more about it here.
Personal consumption collapsed, with vehicle sale falling significantly. Business inventories were up significantly too. Total employee compensation (which includes wages and benefits) rose 2.7% over past 12 months, up from 2.4% a year ago and the highest since Q3 2008, while the household savings rate fell to a multi-year low of 3.1%.
The US government has around $20.5 trillion in debt and pays around $558 billion in interest payments a year (an effective interest rate of 2.72%).
Bond yields have been rising recently in the US on the back of a strong economy. The 10-year bond yield topped 3% (up 0.66% over the past year) recently, the highest since January 2014. The 2-year bond yield topped 2.5% (up a massive 1.18% over the past year), the highest since July 2008 (Read more here). Continue reading “Can the US government really cope with rising bond yields?”
UK GDP was estimated to have increased by 0.1% in Q1 2018 as per the Office for National Statistics. We reported here at the end of March that UK households’ saving ratio fell to the lowest ever on record as mortgage and consumer credit outstanding hit the highest ever.
Continue reading “UK Q1 2018 GDP only increased by 0.1%, growth slowest since Q4 2012”
US real GDP increased at an annual rate of 2.3% in the first quarter of 2018 as per an advance estimate released by the Bureau of Economic Analysis.
US bond yields have soared recently with the 10-year bond yield hitting 3% today (up 0.66% over the past year), the highest since January 2014. The 2-year bond yield topped 2.5% (up a massive 1.18% over the past year), the highest since July 2008. Meanwhile, the Greece 10-year bond yield was lower than 4%, closing at 3.99% (down 2.45% over the past year), the lowest since 2005. Continue reading “US 10-year bond yield over 3% as Greece 10-year bond yield falls below 4%; US 2-year bond yield hits 2.5%”
Based on data from Eurostat, here are key takeaways about house prices in the European Union between 2008 and 2017,
Continue reading “Here’s how house prices in the European Union have changed between 2008 and 2017”
The US Bureau of Labor Statistics data reveals that the US unemployment rate has a hit a new multi-year low four to eight months before the start of every recession since the 1940s. In other words, the economy hits full employment four to eight months before the start of a recession.
The graph below might help visualise it better (the shaded areas indicate recessions),
Why does this matter now? Continue reading “This is what has happened to the unemployment rate in the US four to eight months before every recession since the 1940s and why it matters now”
ECB sells yet another bond after spotting an error
The European Central Bank (ECB) via Bundesbank has sold yet another bond issued by Telefonica Deutschland a year after it bought it. The bond which was due to mature in 2021 breached an ECB rule that they should not hold bonds that pay a step-up coupon (one that could go up in value if certain conditions are met – in this case if the company was acquired).
This was the fourth time they found an error in 2018 and sold a corporate bond. When this happened a couple of weeks ago, we reported it here and asked how many more errors will the ECB find? Well, it would appear traders have taken notice. The ECB sold this bond just after a sharp fall in the price of the bond, implying traders know what all bonds the ECB has bought in error and is likely to sell. Continue reading “Weekly Overview: ECB sells yet another corporate bond after spotting an error; US Banks report Q1 results; Facebook moves user data from Ireland to the US”