Benn Steil

Geo-Graphics

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

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What If Japan Becomes Treasury’s First Currency ‘Manipulator’ in 22 Years?

by Benn Steil and Emma Smith
Japan currency

In May, Japanese Finance Minister Taro Aso and colleagues warned of their willingness to intervene in currency markets to counteract upward pressure on the yen.  And in the wake of Britain’s historic Brexit vote on June 23, which prompted another surge in the currency, even Prime Minister Shinzo Abe joined the chorus. Read more »

Consumer Confidence Suggests Clinton Victory in November

by Benn Steil and Emma Smith
Consumer confidence election

Going back to 1952, consumer confidence has been a fair guide to presidential election outcomes. Confidence has been 12 points higher on average in years the incumbent party has won than in years the opposition party has won.  The difference is statistically significant at the 1 percent level.  As shown in the graphic above, average confidence over 2016 to date is right at the average level for an incumbent party victory.  This is good news for Hillary Clinton—though there is still plenty of time for bad news to boost Donald Trump.

The World Economy is Running on Monetary Fumes

by Benn Steil and Emma Smith
Global monetary policy rates

With global growth stalling, the IMF is calling for more assertive policy action to boost it.  In normal times, monetary stimulus is—even for liberal Keynesians like Paul Krugman—sufficient to address deficient demand.  But these are most surely not normal times. Read more »

Has the Fed Become More Accommodative than the ECB and BoJ?

by Benn Steil and Emma Smith
Real vs. Nominal Interest Rates

A Japanese interest-rate strategist recently told the Wall Street Journal that “every day is like being Alice in Wonderland” since the Bank of Japan’s foray into negative deposit rates on January 29. Though the yen initially fell, as the BoJ wanted, it reversed course quickly.  The yen has of late been trading near 18-month highs.  What is going on? Read more »

CoCo Nuts Have Been Hammered, but the Market Is Doing Just Fine

by Benn Steil and Emma Smith
CoCos

Anxiety over whether Deutsche Bank would suspend interest payments on its contingent convertible bonds, otherwise known as CoCos, fueled a February selloff in the $250 billion market – as well as in bank shares broadly.  While Deutsche Bank has insisted that it will have no difficulty making interest payments, yields on CoCo bonds remain well above their levels at the start of the year – as shown in the graphic above. Read more »

Could China Have a Reserves Crisis?

by Benn Steil and Emma Smith
China reserves

Last summer, U.S. lawmakers were condemning China for pushing down its currency, arguing that it was still “terribly undervalued.” But those days may be long gone.  Chinese and foreigners alike have been stampeding out of RMB, leaving the Chinese central bank struggling to keep its value up and prevent a rout. Read more »

Rate Hikes or Balance Sheet Reductions? How Should the Fed Tighten?

by Benn Steil and Emma Smith
Fed tightening

This post originally appeared in Foreign Affairs online.

On January 27, the U.S. Federal reserve held interest rates steady and, in a modest nod to a market that has been consistently more fearful about the economy than the Fed itself, dropped a line from its December statement saying that the risks to the outlook were “balanced.” Read more »