This is not government debt, this is simply Central Bank balance sheet per capita (for every person in that country), and the numbers are staggering …
At the start of 2019 we wrote that 2019 will be a year that will be different with interest rate hikes slowing or interest rates even reversing.
Earlier this month the European Central Bank said interest rates would remain at record lows at least until the end of the year and then last week this was followed by the Federal Reserve saying that it does not expect an interest rate rise for the U.S. for the rest of 2019.
The 1980s was the Japanese decade with Japanese companies being the most valuable ones in the world and Japan being at the centre of the global economic growth. But since the 1990s, Japan has struggled with growth and deflation.
The Euro Area, China, Canada, Mexico and Japan together account for over 70% of U.S. trade. Have these countries (including the Euro Area group of countries) manipulated their currencies to boost exports? In this century (2000 onwards) the Chinese Yuan, the Canadian Dollar and the Euro have appreciated against the dollar. The Japanese Yen has been largely unchanged against the U.S. dollar since the start of this century and only the Mexican Peso has weakened against the dollar.
Is China selling U.S Government Bonds (Treasury Bills, T-Bonds and Notes) given the trade
war tensions between China and the United States? The simple answer to that is no. Actually, no major foreign country holder of bonds is really selling.
But you might wonder what is going on if you make a chart look like this,
Broad Money M3
Broad money (M3) includes currency, deposits with an agreed maturity of up to two years, deposits redeemable at notice of up to three months and repurchase agreements, money market fund shares/units and debt securities up to two years.
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”
Some 80% of 10-year Japanese government bonds are held by the Bank of Japan. And apparently there are days when no one trades those 10-year bonds because there is no point of trading it. Why? Well, because the Bank of Japan has a policy to control yield curves and since they hold majority of it there are hardly any price movements.
But is also claimed that there are days when the 2-year bonds aren’t traded. That is interesting because the Bank of Japan only holds a small proportion of 2-year bonds. How to traders keep their jobs then? They trade bond futures instead. Continue reading “Apparently, there are days when no one trades some Japanese government bonds; Could China devalue their currency or sell US Treasurys?”
The divergence of interest rates, bond yields, inflation, currency strength, budget deficit and total debt of countries around the world has never been bigger. We look at how the US, the UK, the Eurozone, Japan, Switzerland and India are doing in addressing paying off their debt. Continue reading “High (or hyper) inflation or long term zero (or negative) interest rates – how might the world pay its debt?”
Greece (Moody’s Credit Rating: Caa2) is now paying 83 bps lower interest on 2-year bonds than the US (Moody’s Credit Rating: Aaa). Is the US now truly the exception? Continue reading “US 10-year bond yield hits a 4-year high, is the US now an exception?”