Iran trade with the US and Europe; Euro area consumer credit growth; Almost 3% coupon on 10-year Treasury bond; US yield curve inversion vs Euro area curve yield inversion

So, the US exits the Iran nuclear deal. The business impact of it?

Not much at all for the US. But a very major impact for Europe.

US exports to Iran
2015 exports were $282 million, 2016 were down to $172 million and 2017 were further down to $138 million

Iran exports to the US
Just $64 million in 2017

European exports to Iran
€10.8 billion ($12.80 billion) in 2017, has grown 10-fold since 2015

Iran exports to Europe
€10.14 billion ($12.02 billion) in 2017, has grown 10-fold since 2015 Continue reading “Iran trade with the US and Europe; Euro area consumer credit growth; Almost 3% coupon on 10-year Treasury bond; US yield curve inversion vs Euro area curve yield inversion”

Oil highest since November 2014; Dollar index hits its highest level in 2018; Warren Buffett and Bill Gates on Cryptocurrencies

Oil Prices

The price of crude oil crossed $70 per barrel today, the highest since November 2014.

US firm ConocoPhillips has taken over oil inventories and terminals of Venezuelan state-owned PDVSA under court orders to enforce a $2 billion arbitration award by the International Chamber of Commerce. Further, US President Donald Trump said he’d announce his decision on the Iran nuclear deal on Tuesday. Both developments contributed to soaring oil prices. Continue reading “Oil highest since November 2014; Dollar index hits its highest level in 2018; Warren Buffett and Bill Gates on Cryptocurrencies”

Weekly Overview: UK interest rate hike expectations; Argentina hikes interest rate to 40%; LIBOR OIS; US Money Supply growth accelerating again; Bank of Canada and Bank of England speeches

UK interest rate hike expectations

The Monetary Policy Committee of the Bank of England meets on Thursday, May 10 to decide the direction of interest rates.

Following a weak UK Q1 2018 GDP growth of only 0.1%, the slowest since Q4 2012 (read here) and inflation falling from 2.7% in February to 2.5% in March (against a Bank of England target of 2%), the market is now pricing in a 17% of a rate rise in May. The market had factored in a 100% chance of a hike just a few weeks ago.

UK 10-year bond yields fell 5bps during the week. The 10-year bond now yields 1.4% (up 0.32% over the past year)

Continue reading “Weekly Overview: UK interest rate hike expectations; Argentina hikes interest rate to 40%; LIBOR OIS; US Money Supply growth accelerating again; Bank of Canada and Bank of England speeches”

Highlights from April 2018

Here are highlights from April 2018,

Our three most read posts in April 2018

1. Alphabet (the parent company of Google) spent the most as a company on lobbying. Facebook’s spend on lobbying increased 5500% since 2009. They spent most lobbying on changes to … data privacy (Click here to read).

2. 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 (Click here to read).

3. Not an April Fools’ Day joke – this really is how the US Dollar has performed against each currency of the world over the past one year (Click here to read). Continue reading “Highlights from April 2018”

Household saving rates are falling globally

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).

Households saving ratio, seasonally adjusted
UK Household Saving Rate, Source: Office for National Statistics

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”

Weekly Overview: Q1 2018 GDP numbers; ECB on QE; US bond yields soar; Other things

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%.

Continue reading “Weekly Overview: Q1 2018 GDP numbers; ECB on QE; US bond yields soar; Other things”

Can the US government really cope with rising bond yields?

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?”