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Have banks in the U.S. started lending more money recently?

We wrote recently that delinquency and charge-off rates across banks in the United States remain low and that bad loans aren’t really increasing for banks in the United States despite some claiming that they are. We had also written about banks in the United States having a problem – they couldn’t find enough customers to lend money to. We wrote that last year and it appears a few things are changing; bank lending in the U.S. is now finally on the up.

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Is the U.S. unemployment rate low due to increased hiring or an increasing number of people quitting the labour force?

This is an interesting one, one of our three U.S. recession indicators is the U.S. unemployment rate.

The U.S. Bureau of Labor Statistics data reveals that the U.S. unemployment rate has 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 unemployment rate goes up at least 1% and then doesn’t go back down without a recession occurring.

US unemployment rate until January 2019

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European Union and Eurozone trade statistics for 2018 – EU swings to a trade deficit; EU – record trade surplus with the U.S. and record trade deficit with Russia; UK had largest intra-EU trade deficit

The first estimate of Euro area or Eurozone (EA19) and European Union (EU28) trade statistics by Eurostat for 2018 reveals several interesting insights.

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The Baltic Dry Index is down 48% over the past month

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. The index is based on a daily survey of agents all over the world.

 The Baltic Dry Index is down 48% over the past month (and down 47% over the past year). Is this an indicator of more trouble around global growth?

Baltic Dry Index 20190212

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Government bond yields have been falling globally

We haven’t written about government bond yields recently but there has been a lot of action in the bond market. Government bond yields have been falling globally which are an indicator that markets are expecting stagnant or falling interest rates. 10-year government bonds are the most tracked and traded and yields have mostly fallen compared to a year ago.

The U.S. 10-year Treasury bond yield is now at 2.65%, down 19 bps from a year ago.

US 10 year government bond yield 20190210 1year change

 

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European Commission (again) cuts GDP growth forecast for the European Union; Bank of England cuts UK GDP growth forecast; Germany forecast to grow slower than the UK despite Brexit

The European Commission slashed their GDP growth forecast for the European Union (excluding the United Kingdom) and the Eurozone for 2019 and 2020 citing slowing growth in China and weakening global trade.

The growth forecast for 2019 for the European Union (excluding the United Kingdom) was cut to 1.5% for 2019 (was previously forecast 2%) and for the Eurozone was cut to 1.3% (was previously forecast 1.9%).

Germany, Italy and the Netherlands all saw big downgrades for their growth outlook.

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