Benn Steil

Geo-Graphics

A graphical take on geoeconomic issues, with links to the news and expert commentary.

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Showing posts for "U.S."

Why the Labor Data Point to a September Fed Taper

by Benn Steil and Dinah Walker
LPFR and discouraged workers

The August “jobs report is an important reminder that all this tapering talk is insane and dangerous,” pronounced Slate economics writer Matt Yglesias, reflecting the consensus of the econo-commentariat.  But as today’s Geo-Graphic shows, the report is actually wholly consistent with a September Fed taper. Read more »

Fed Taper Talk Jolts Rate Expectations for 2015

by Benn Steil and Dinah Walker
taper expectations

From September 2012 to March of this year, the Fed had been remarkably successful at guiding the market’s expectations for future interest rates through publication of its unemployment projections.  As today’s Geo-Graphic shows, when the Fed lowered its unemployment projection for a given future date the market raised its projection for interest rates around that date proportionately.  It was a tightly correlated dance. Read more »

Mortgages and Monetary Policy Don’t Mix

by Benn Steil and Dinah Walker
QE and Mortgage Rates

From the beginning of 2009 through this past May 21st, the Fed amassed a portfolio of mortgage-backed securities (MBS) valued at $1.2 trillion.  Over this period, the average 30-year fixed mortgage rate fell from 5.33% to 3.65%, and the spread between that rate and the 10-year government borrowing rate fell from 2.8 percentage points to 1.7 percentage points. Read more »

The New Geo-Graphics iPad Mini Index Should Calm Talk of Currency Wars

by Benn Steil and Dinah Walker

The “law of one price” holds that identical goods should trade for the same price in an efficient market.  To what extent does it hold internationally?

The Economist magazine’s famous Big Mac Index uses the price of McDonalds’ burgers around the world, expressed in a common currency (U.S. dollars), to estimate the extent to which various currencies are over- or under-valued.  The Big Mac is a global product, identical across borders, which makes it an interesting one for this purpose.  Yet it travels badly – cross-border flows of burgers won’t align their prices internationally. Read more »

Is the Fed Right to Calibrate Asset Purchases to Economic Data?

by Benn Steil and Dinah Walker
recalibration

The Fed is trying to have its cake and eat it too. Having earlier tried to anchor market expectations of future low interest rates by pledging that policy would remain accommodative into 2015, Fed Chairman Ben Bernanke is now saying that the Fed will consider “a recalibration of the pace of its [asset] purchases . . . in light of incoming information.” Read more »

Can China’s Bond Market Support a Global RMB?

by Benn Steil and Dinah Walker
RMB

On April 24, the Australian central bank announced that it would raise the proportion of its reserves devoted to Chinese financial assets from 0% to 5%, likely among the highest such allocations among world central banks.  Will other major central banks follow suit? Read more »

Eric Rauchway Battles “The Battle of Bretton Woods”

by Benn Steil and Dinah Walker
Don Quixote, courtesy of the Biblioteca de la Facultad de Derecho y Ciencias del Trabajo Universidad de Sevilla. Don Quixote, courtesy of the Biblioteca de la Facultad de Derecho y Ciencias del Trabajo Universidad de Sevilla.

Benn’s new book The Battle of Bretton Woods has been called “the gold standard on its topic” by the New York Times, “a triumph of economic and diplomatic history” by the Financial Times, and “a superb history” by the Wall Street Journal.  But Eric Rauchway is having none of it.  He’s dinged the book twice now, its only two negative reviews—first for the IMF’s Finance & Development and then, in an extended dance remix version, for the TLS. Read more »

Beware Friendly Fire in the Currency Wars

by Benn Steil and Dinah Walker
imports and inflation

Prominent economic commentators have argued the cases for significantly weaker currencies in each of the world’s major economies – in particular, the United States, the eurozone, Japan, and the UK. As these four economies represent over half of the global economy, it’s clear that they can’t all accomplish this feat. It’s also far from clear that they should all want to. Read more »