Leaning on the Loonie
It seems Canadians were boosting sales near the border in the New York and Minneapolis Federal Reserve districts, according to the Federal Reserve’s Beige book, a periodic anecdotal assessment of regional economies.
No surprise – the loonie is at par with the dollar – but just one vivid example of the benefits of the falling greenback. Read more
That pesky housing market
Ben Bernanke, Federal Reserve chairman, earlier today cited “residential and nonresidential construction” as a headwind to the “moderate” economic recovery. But he also said that consumer spending will be boosted by “a gradual pickup in jobs and earnings, the recovery in household wealth from recent lows, and some improvement in credit availability.”
Household wealth is, of course, comprised of many types of assets, including retirement portfolios and other equity and bond investment holdings. But one of its major components is home values.
So is that portion of household wealth likely to grow? See the somewhat downbeat graph. Read more
IMF to China: RMB revaluation made painless
The latest of a stream of paper out of the IMF in the run-up to its meetings next week came out today: the analytical chapters (as opposed to the forecast) of the world economic outlook. Personally I’ve always thought they were more interesting than the forecast, since no-one is that good at macroeconomic forecasting and the Fund doesn’t have access to much more information than anyone else.
Anyway, this one is on economies that have exited from large current account surpluses and how they did it. Short of calling the chapter Memo To Beijing, it could scarcely be less explicit. No big surprise that they recommend an appreciating exchange rate. Read more
Bernanke says recovery gaining pace
Ben Bernanke, Federal Reserve chairman, has predicted that a “moderate economic recovery” would unfold in the US over the next several quarters on the back of stronger spending by businesses and consumers.
In testimony before the Joint Economic Committee in Congress, Mr Bernanke offered a slightly more upbeat outlook for the economy than he had in recent remarks, suggesting that the recovery is gaining traction. Read more
Not only is Greek and UK debt insurance justifiably pricey, it is adding to the cost of other sovereign debt insurance. This from a fascinating little paper from the Bank of Japan, released today.
Credit default swaps (CDS) offer a form of insurance to lenders against the risk of defaulting borrowers. The quantity of sovereign CDS has grown rapidly in the past year, increasing by 30.8 per cent year-on-year to February, compared with just 0.6 per cent for corporate CDS.
The chart above shows that Greek CDS prices are driven largely by idiosyncratic —i.e. Greek—factors, such as the fiscal deficit. The Portuguese chart, by contrast, is increasingly driven by “other” factors: these are defined as the “spillover effects of an idiosyncratic shock in other countries”. Here, I suspect, that means Greece. So where a chart has a lot of grey on it, that country is likely driving CDS prices for other sovereign debt, especially those that have a lot of light blue. And the main culprits (see other charts after jump): Greece, Japan and the UK. Read more
UK election 2010: The good, bad and ugly LibDems
The Liberal Democrats usually get away with little scrutiny of their specific policies because the party will not form the next government, even if it might be highly influential in the event of a hung parliament.
Without going through the 109 pages in detail, there is good, bad and downright ugly aspects to the LibDem claims and plans. Read more
Eurozone: a light at the tunnel end?
Eurozone industry, at least, is doing just nicely. Eurostat, the statistical agency, reports production rose 0.9 per cent in February, a much larger rise than expected. If March’s figures simply hold steady, the first quarter increase would be more than 3 per cent – the biggest quarter-on-quarter jump in the series’ history, according to BNP Paribas. True, after the dramatic slump at the start of last year, we’re only back at levels of production seen in 2001. But the recovery is clearly v-shaped.
Don’t expect first quarter gross domestic product figures to be as flattering, however. The bitter winter is likely to have had a significant dampening effect, particularly on construction, which is not covered in the latest figures. Last week the Organisation for Economic Cooperation and Development warned of a “double-dip” contraction in Germany, the eurozone’s largest economy. Read more
The Singaporean dollar will be allowed gradually to appreciate following a one-off strengthening today that a Bloomberg source estimates at about 0.6 per cent. At the same time, the Trade and Industry ministry raised its forecast for this year’s growth to 7-9 per cent, from 4.5-6.5 per cent.
The local dollar will trade in a new, stronger band, the midpoint of which is roughly the top of the previous band. There will be no change to the width of the band. The dollar is measured against a trade-weighted index of large international currencies, in proprortions held secret by the country’s Monetary Authority. Read more
| About this blog | Blog guide |
Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
