The problem with relying on the dollar to produce a real appreciation in China …
Is now rather obvious. The dollar goes down as well as up.
Last fall, demand for dollars rose — in part because Americans pulled funds out of the rest of the world faster than foreigners pulled funds out of the US. The dollar soared. ...
The faster the rise, the bigger the fall?
Cross-border bank claims - according to the Bank for International Settlement (BIS) — shrank in the first quarter, though at a slower pace than in the fourth quarter. That basic storyline also holds for the emerging world: the total amount the major international banks lent to the world’s emerging economies fell in...
Not necessarily always stabilizing …
One common argument — at least prior to the crisis — was that sovereign investors, because of their long-term focus, were generally a stabilizing presence in the market. Sovereign wealth funds in particular. And presumably central bank reserve managers as well. After all, in many cases, the line...
Two trillion and counting …
China’s latest surge in reserves – a surge that look its total holdings over two trillion dollars – didn’t really register in the financial media. China’s first trillion was a big story. The second trillion, not so much. It generated a few news stories and blog...
SAFE, state capitalist?
One of the questions raised by the expansion of sovereign wealth funds – back when sovereign funds were growing rapidly on the back of high oil prices and Asian countries’ increased willingness to take risks with the reserves – was whether sovereign funds should best be understood as a special breed of private investors motivated...
And now, the rest of the story: long-term portfolio flows have fallen by more than the trade deficit
The goods news: the US trade deficit has shrunk. On a rolling 12m basis the trade deficit is down to around $500 billion, and the data from the last few months suggests that it should fall even further.
The bad news: the US trade deficit hasn’t shrunk by as much as foreign demand...
Don’t ignore the adjustment that has taken place; the US trade deficit is half its size this time last year …
Most reporting on the May trade data tried to fit it into the “green shoots” meta-narrative, thanks to the small uptick in exports. Never mind that total exports were about equal to their level in March even after the May uptick– and that about half the uptick between May and April came from...
Huge thanks
This is Brad Setser. I am back, and will resume posting soon.
But I first wanted to offer my enormous thanks to Mark Dow of Pharo and Rachel Ziemba of RGEMonitor for filling in here when I was away. They set a standard that I will have a hard time matching. ...
May TIC Data: Still Buying US Assets But Just the Liquid Ones
This is Rachel Ziemba. Brad will I think be back soon but I figured I’d get in one last post going into some excessive details on the Treasury International Capital (TIC) data.
These days, the TIC data released monthly by the US Treasury and detailing the capital flows to and from the U.S. often seems anti-climactic...
Nothing brings out buyers like higher prices, and other short stories
This post is by Mark Dow
DXY, a dollar index, looks like it has started to break down. At my firm, Pharo, we have been whispering on the trading desk over the last two days that this was looking increasingly likely. The implications are positive for risky assets. Markets play a lot of tricks on investors,...
Chinese Reserves: Boiling Over Again?
This Rachel Ziemba, filling in for Brad Setser. I’m having technical upload issues so will add charts later but for now some thoughts on reserves
Chinese reserves data released today seem to be one more sign that the Chinese stimulus might be working a bit too well. China’s reserves stood at $2.13 trillion up from $1.95...
Will the Chinese Keep Saving?
This is Rachel Ziemba of RGE Monitor where this post also appears.
In a recent post, Jeffrey Frankel asks will the U.S. Keep Saving? noting that despite the recent increase in the U.S. savings rate, the demographics of the U.S. (as well as those of Japan and Europe) will contribute to a reduction in savings....
