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.
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.
- Parts of the European Union have seen GDP per capita shrink between 2007 and 2017 and the overall compounded annual growth rate for the European Union was just 1.2%
- GDP growth for the European Union between 2007 and 2017 adjusted for inflation was negative
- Banks in Greece, Cyprus, Portugal and Italy have a non-performing loan ratio of over 10% a decade on from the financial crisis and have only provisioned around 50% of the losses
- The European Central Bank (ECB) is by far the biggest holder of European bonds and has a balance sheet of €4.5 trillion or some 45% of the GDP of the Eurozone
- 18 of the 28 countries that are part of the European Union have seen house prices fall between 2008 and 2017
- Greece has been the worst affected country, with its stock market down 85% since 2007, GDP per capita down 22% since 2007, house prices down 43% since 2008 and banks in Greece currently have a non-performing loan ratio of 42%
- Eurozone Debt as % of GDP is gradually falling but is still historically high
- Since the financial crisis of 2008, economic uncertainty has seen falling fertility rates for the European Union with population now set to fall over the coming decades
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,
- 18 of the 28 countries that are part of the European Union saw house prices fall
- 10 of the 28 countries that are part of the European Union saw house prices rise
- Only 4 countries have seen prices rise over 10% during the entire period
- 14 countries have seen prices fall over 10% during the entire period
- Romania (-48.77%), Greece (-42.84%) and Spain (-30.50%) were the 3 worst performing countries for house prices
- Sweden (+55.72%), Austria (+39.57%) and Luxembourg (+32.41%) were the 3 best performing countries for house prices
- The average house price across the European Union fell 6.98% 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),
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”
Here is the debt outstanding for all commercial banks in the US (all data as of March 31, 2018),
Total consumer credit including student loans $3.9 trillion (up from $2.6 trillion in 2008)
Total commercial and industrial loans $2.15 trillion (up from $1.5 trillion in 2008)
Commercial real estate loans $2.1 trillion (up from $1.6 trillion in 2008)
Mortgage Backed Securities $1.76 trillion (up from $800 billion in 2009)
Student loans $1.5 trillion (up from $500 billion in 2008)
Consumer credit cards and other revolving credit $775 billion (up from $400 billion in 2008)
Mortgage debt $1.32 trillion (down from $1.42 trillion in 2008)
Total Consumer Credit Outstanding:
Here is the gross debt of every country as percentage of GDP for 2017 (source: International Monetary Fund),
The European Central Bank (ECB) has asked Deutsche Bank to estimate the costs of winding down its trading operations. Apparently Deutsche Bank is the first bank that has been asked to run this exercise, but others may follow.
How complex is Deutsche Bank? Continue reading “ECB asks Deutsche Bank to estimate the cost of winding down its investment bank; Spain’s sovereign debt upgrade; Canadian bond yields rising most amongst the G20”