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Countries

The Israeli Shekel: Flying under the radar

Though the recent US Treasury report did not name any country as a currency manipulator (see more details on this in Mario’s blog), the monitoring list centres on larger economies that meet the following criteria:

  1. The country has a significant bilateral trade surplus with the United States defined as more than USD 20 billion.
  2. The country has a current account surplus of at least 3% of GDP and …

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The US has not labelled Switzerland a currency manipulator, yet

Switzerland has made headlines of late as a potential candidate to be labelled a currency manipulator by the U.S. Treasury. For those countries at risk, a report recently published by the U.S Treasury sets out three key criteria the U.S. Treasury will use in order to assess whether a country is “pursuing unfair practices”. Firstly, the country would have a significant bilateral trade surplus wi…

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Our demographic challenges require new economic thinking

Capital markets have experienced a major shift in sentiment over the course of the last couple of months. Fears over secular stagnation and deflation have dissipated, and investors have been willing to embrace risk assets again. Many economists have revised upwards their estimates of global economic growth, starting first with the US where the fiscal reigns are expected to be loosened in order …

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A dozen things I’m finding interesting in bond markets. Includes weasels.

1. On the face of it, long term US Treasury yields are looking fair value, having traded on the dear side since the middle of 2014.  Below is a chart you will have seen before on the blog as I’ve been using it for some time.  It shows the relationship between the Fed’s long term expectations of short term interest rates (taken, with a pinch of salt, from the FOMC’s dot plots) and the bond marke…

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Research trip: Mexico & Trump – a key call in emerging markets

President Trump’s anti-Mexico rhetoric has made Mexican assets one of the key calls in emerging market debt. I have just returned from a research trip to Mexico where I met with local economists, analysts, and corporate bond issuers. Below are a number of observations from my time there.

Donald Trump won the election on a fairly protectionist rhetoric – with a special focus on Mexico – and the …

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Private sector credit in China is approaching an historic crisis level

Credit is the oil that lubricates the engine of an economy. For this reason, economists watch credit statistics closely, in order to assess the sustainability of growth. If credit isn’t growing, it suggests households and firms aren’t confident enough in their respective outlooks to borrow and invest. If credit grows too quickly, it could result in financial and macroeconomic instability – hist…

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China Renminbi: the USD $50,000 question

Last week, in line with expectations, China announced the renewal of the $50,000 limit of dollar purchases by individuals. What’s changed however is that the foreign exchange commission (SAFE) has tightened the scrutiny on the foreign exchange purchases. Applicants are now required to detail the purpose behind their transactions in order to ensure that the purchase is for “suitable purposes” (e…

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Swiss bank account holders: negative interest rates are here to stay

It was big news when Postfinance, the first Swiss bank categorised as “too-big-to-fail”, announced the introduction of negative interest rates to customers holding deposits of CHF 1 million and above. Many are now asking how long it will take until banks apply this approach to retail savers. I would argue that it may not be too long given the situation for Swiss banks remains challenging.

Part …

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The Irish economy: a Bond Vigilantes quick video update

Last weekend we were at the brilliant Kilkenomics festival in Kilkenny, Ireland.  Whilst we were there (and it’s a fantastic town) we filmed this short video.  In the wake of the Trump election victory there’s a mini-panic going on in Ireland, not least because, in common with Mexico, there are many undocumented Irish in the US whose future has become uncertain.  There’s also the huge issue of …

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The book taking France by storm. Économie du Bien Commun – a review.

During my free time in August I read the book that has taken the French political and economic landscape by storm (no, it’s not  “Capital” by Thomas Piketty). Nobel Prize winning economist, Jean Tirole, has written a book entitled “Économie du Bien Commun” (or “economy for the common good”). The book is written in plain language and attempts to reach a large audience, including readers with ve…

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