Why wouldn’t it be?
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.
Continue reading “Can the UK Government afford higher interest rates or rising bond yields?”
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”
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”
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”
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?”
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%”
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”
Oil prices closed at $67.39 on Friday, gaining 8.6% during the week and hitting a 3-year high. Like we covered here, the impact of oil prices is being felt with oil dependent companies like airlines already seeing margins squeezed.
Meanwhile, US 2-year Treasury bonds hit a high of 2.373%, the highest since September 9, 2008 (if the date sounds familiar it was just 5 days before Lehman Brothers entered Chapter 11 administration). Continue reading “Weekly overview: Oil prices hit 3-year high; US 2-year Treasury yields highest since September 2008; Subprime is making a comeback”