Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, April 14, 2025

AI Summary. The US trade deficit reflects a savings-investment gap driven as much by American pro-consumption policies as by China's pro-saving policies, with the roughly $1tn trade deficit matched against a federal budget deficit of about $1.3tn. Rather than borrowing cheaply to build productive capacity, the federal government largely sent checks to citizens to support current consumption.

John Cochrane The Grumpy Economist
Date Posted:

Chronic American deficits are, “at least partly driven by government policies — and as much [by American] pro-consumption policies as China’s pro-saving policies.” @JohnHCochrane argues fiscal deficits largely fund consumption via transfers.

Do domestic pro-consumption policies drive the US trade deficit?

Core argument: The US trade deficit of about $1 trillion is smaller than the federal budget deficit of about $1.3 trillion, and the author argues that all of the extra saving flows to the federal government.

The savings/investment nexus behind part of our trade deficit / capital surplus is at least partly driven by government policies — and as much our pro-consumption policies as China’s pro-saving policies. The US reacted to the offer by other countries to borrow from them (sell them assets) at very low interest rates, not by building factories, but going on a consumption binge. Just as Greece had done. Most of that is due to the actions of the federal government. The total trade deficit is about $1 trillion. The US budget deficit is about $1.3 trillion. All of that extra saving is going to the federal government. And the federal government is not building a trillion dollars a year of productive investment with the money. The federal government is, by and large, sending checks to its citizens to support current consumption. The federal government saw an amazing opportunity to borrow cheaply, sometimes even at negative real rates of interest. Borrow it did, and sent checks to happy voters.

Takeaways by Macro Roundup® AI

  1. The US trade deficit of about $1 trillion is smaller than the federal budget deficit of about $1.3 trillion, and the author argues that all of the extra saving flows to the federal government.
  2. The author contends the federal government is not building a trillion dollars a year of productive investment with borrowed funds, but largely sending checks to citizens to support current consumption.
  3. The author argues the savings/investment nexus behind part of the US trade deficit and capital surplus is partly driven by government policies, with American pro-consumption policies mattering as much as China's pro-saving policies.

Related Articles:

  • Without Spending Cuts, Brace for Slow Growth — The author argues that US trade deficits have funded debt-financed consumption rather than domestic business investment, noting that since 2000 real interest rates have tended to fall as trade deficits widen while business investment has been uncorrelated with both. If tariffs shrink trade deficits, interest rates could rise and worsen America's fiscal balance.
  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.
  • The Dollar and the Bond Market’s Ominous Message for Trump — JPMorgan Chase estimates Treasury yields rise a third of a percentage point for each $300bn decline in foreign official holdings of US Treasuries. Carlyle Group notes gold has strongly outperformed inflation-protected Treasuries, suggesting gold is now the world's preferred safe-haven asset as reserve managers grow more hesitant to add Treasury exposure.

AI Summary. The dollar index fell to a three-year low while the euro surged and German government bond prices gained relative to US Treasuries, even though Germany plans to borrow far more and the US is cutting its deficit. The 10-year US Treasury yield rose 50 basis points in a week to just under 4.5%.

John Authers Bloomberg
Date Posted:

Despite German fiscal expansion and uniform Republican control of government in Washington, bunds have gained while Treasuries fell. While @johnauthers notes at 4.5% the 10-year yield isn’t that high, the divergence “is stunning.”

Why are German bonds gaining while US Treasuries and the dollar fall?

Core argument: The US 10-year Treasury yield rose 50 basis points in a week to just under 4.5%, a weekly move last seen in November 2001, after reaching 4.8% in January and briefly topping 5% in 2023.

In early Asia trading, the DXY dollar index dropped to a three-year low. After US Vice President JD Vance launched his attack on Europe two months ago, prompting desperate European attempts to beef up their defense, the spread of German over US yields ballooned but then came straight back down. Meanwhile, the euro has surged upward. A further weirdness post-Vance: Germany is now going to borrow far more, which should make its bonds less attractive. The US is taking a chainsaw to the federal budget in a brutal attempt to cut the deficit and borrow less. But the prices of bunds and Treasuries, as measured via exchange-traded funds tracking them, show that Germany has gained while the US has dropped. This is stunning. It’s true that US yields still aren’t all that high. At Friday’s close, the 10-year yielded just under 4.5%; it hit 4.8% in January, and briefly topped 5% in 2023. But the speed demands attention — it gained 50 basis points last week. The last time that happened was in November 2001. The week’s price action tends to confirm that bond yields are in a rising trend that started five years ago. Such things matter in the bond market, which tends to follow long cycles.

Takeaways by Macro Roundup® AI

  1. The US 10-year Treasury yield rose 50 basis points in a week to just under 4.5%, a weekly move last seen in November 2001, after reaching 4.8% in January and briefly topping 5% in 2023.
  2. The DXY dollar index fell to a three-year low in early Asia trading, while the euro surged and the spread of German over US yields ballooned after US Vice President JD Vance's attack on Europe before coming straight back down.
  3. Exchange-traded funds tracking bunds and Treasuries show German bond prices gaining and US prices dropping, even as Germany plans to borrow far more and the US cuts its federal budget to borrow less.

Related Articles:

  • Germany’s Spending Push Drives Up Borrowing Costs Across Eurozone — Germany's planned defence spending has pushed 10-year German government bond yields close to 3%, lifting borrowing costs across the eurozone because German debt serves as the bloc's benchmark. Investors warn this intensifies pressure on heavily indebted economies; one simulation projects Italy's debt-to-GDP ratio reaching 153% and France's 122% by 2030 absent spending cuts or faster growth.
  • The Great European Disentanglement From US Stocks Has Only Just Started — Federal Reserve data show European investors held about $9tn in US stocks, roughly 17% of the total value of the US market. After inflation, a dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, versus $1.63 for the rest of the world.
  • Foreign Ownership of US Equities, Treasuries, and US Credit — Foreign investors hold $19tn in US equities, $7tn in Treasuries, and $5tn in US credit, corresponding to 20% of US equities and 30% each of Treasuries and credit outstanding.

AI Summary. The author argues that rising 10- and 30-year US Treasury yields do not show up in long-term inflation expectations, judging by the spread between inflation-indexed and non-indexed Treasury bonds. The author attributes the increase instead to a shift in demand away from long-dated US debt, reinforcing higher long-term real interest rates.

Ken Rogoff Dollar Decoded
Date Posted:
Is Database:
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The spreads between inflation-indexed and non-indexed Treasury bonds do not suggest long-term inflationary expectations have risen. To @krogoff that implies “a shift in demand away from long-dated US debt” is underway.

Are higher long-term Treasury yields driven by weaker demand, not inflation expectations?

Core argument: The rise in US 10- and 30-year Treasury yields is not reflected in higher long-term inflation expectations, as measured by spreads between inflation-indexed and non-indexed Treasury bonds.

It would be easy to explain what is going on with long-dated US treasuries if it were simply the case that investors were finally waking up to the risk of higher inflation — or least periodic burst of it — in a world of deglobalization and patently unsustainable budget deficits. In that case, most of the rise of ten and thirty-year rates would be reflected in higher LONG-TERM inflation expectations. Yet, that does not seem to be the case, at least using the spreads between inflation indexed and non-indexed Treasury bonds. At first glance anyway — and I expect to look more deeply in due time and report on these pages — it really is a shift in demand away from long-dated US debt, a shift that will reinforce the pain of higher long-term real interest rates. The rise over the past couple years has come as no surprise to those of us who think one has to look very long-time periods to distinguish between a genuinely permanent shock as opposed to say, a long-lasting but ultimately temporary shock such as the one that occurred in the wake of the 2008-09 global financial crisis. I never bought into the secular stagnation thesis.

Takeaways by Macro Roundup® AI

  1. The rise in US 10- and 30-year Treasury yields is not reflected in higher long-term inflation expectations, as measured by spreads between inflation-indexed and non-indexed Treasury bonds.
  2. A preliminary reading attributes the yield increase to a shift in demand away from long-dated US debt, a shift expected to reinforce the pain of higher long-term real interest rates.
  3. Distinguishing a genuinely permanent shock from a long-lasting but ultimately temporary one, such as that following the 2008–09 global financial crisis, requires examining very long time periods, an argument paired with rejection of the secular stagnation thesis.

Related Articles:

  • Without Spending Cuts, Brace for Slow Growth — The author argues that US trade deficits have funded debt-financed consumption rather than domestic business investment, noting that since 2000 real interest rates have tended to fall as trade deficits widen while business investment has been uncorrelated with both. If tariffs shrink trade deficits, interest rates could rise and worsen America's fiscal balance.
  • Tariffs, Saving, and Investment — The US trade deficit reflects a savings-investment gap driven as much by American pro-consumption policies as by China's pro-saving policies, with the roughly $1tn trade deficit matched against a federal budget deficit of about $1.3tn. Rather than borrowing cheaply to build productive capacity, the federal government largely sent checks to citizens to support current consumption.
  • Foreign Ownership of US Equities, Treasuries, and US Credit — Foreign investors hold $19tn in US equities, $7tn in Treasuries, and $5tn in US credit, corresponding to 20% of US equities and 30% each of Treasuries and credit outstanding.

AI Summary. The dollar and US Treasuries sold off together while gold strengthened, which the author argues reflects investors moving out of Treasuries and the dollar rather than a broad deleveraging, in which even gold would be sold. Tighter swap spreads and financing data are read as signs of foreign investors exiting, raising the possibility of extreme stock market downside.

Joseph Wang Fed Guy Blog
Date Posted:

If rising yields, a weakening dollar, and higher gold prices are being driven by foreign real money investors rotating out of dollar assets, @FedGuy12 notes there is “extreme downside in the stock market” given that foreigners hold $30T of $ assets.

Are foreign investors exiting Treasuries and the dollar for gold?

Core argument: The dollar and Treasuries sold off aggressively through the week even as risk sentiment deteriorated and tariff news flow dominated.

Both the dollar and Treasuries sold off aggressively throughout the week even as risk sentiment deteriorated and tariff news flow dominated. Gold’s strength suggests last week’s price action is not be entirely be due to deleveraging, but could reflect a deeper shift in investor sentiment. In a typical market deleveraging everything liquid is sold, even gold. Gold’s ongoing strength suggests some investors are moving out of Treasuries, out of the dollar and into gold. Tighter swap spreads also support the theory that real money investors have increased their selling of cash Treasuries. When real money investors sell their Treasuries they sell to a dealer. Real money investors are investors who buy securities with cash rather than a loan. The financing data leans towards a foreign investor exodus, and suggests such a scenario opens up the possibility of extreme downside in the stock market.

Takeaways by Macro Roundup® AI

  1. The dollar and Treasuries sold off aggressively through the week even as risk sentiment deteriorated and tariff news flow dominated.
  2. Gold's continued strength argues against a pure deleveraging episode, in which all liquid assets including gold are sold, and instead suggests some investors are rotating out of Treasuries and the dollar into gold.
  3. Tighter swap spreads support the view that real money investors, who buy securities with cash rather than a loan, have increased sales of cash Treasuries to dealers, with financing data leaning toward a foreign investor exodus that opens the possibility of extreme stock market downside.

Related Articles:

AI Summary. The University of Michigan survey of consumers shows sentiment declining among households earning both above and below $100,000, job-loss worries at levels normally seen in recessions, a record-high share saying business conditions are worsening, falling income expectations, and rapidly rising inflation expectations. The concern is that weak sentiment spills over into weaker actual spending.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk notes consumer sentiment is now below its 2008-2009 trough; it is not yet known if the decline in sentiment is spilling over to changes in actual consumer spending.

Is weak consumer sentiment spreading across incomes and expectations?

Core argument: The University of Michigan's April consumer sentiment survey shows confidence weaker than during the 2008 financial crisis, with sentiment declining rapidly among households earning both above and below $100,000.

The April survey of consumer sentiment from the University of Michigan shows the following: Consumer sentiment is declining rapidly both for households making more than $100,000 and less than $100,000. Consumers’ worries about losing their jobs are at levels normally seen during recessions. A record-high share of consumers think business conditions are worsening. Households’ income expectations are declining. Inflation expectations are rising at an unprecedented speed. The bottom line is that consumer sentiment is very weak, and the fear is that this will spill over to weaker actual spending.

Takeaways by Macro Roundup® AI

  1. The University of Michigan's April consumer sentiment survey shows confidence weaker than during the 2008 financial crisis, with sentiment declining rapidly among households earning both above and below $100,000.
  2. A record-high share of consumers in the April Michigan survey think business conditions are worsening, while job-loss worries sit at levels normally seen during recessions and income expectations decline.
  3. Inflation expectations in the April Michigan survey are rising at an unprecedented speed, and the fear is that very weak consumer sentiment will spill over into weaker actual spending.

Related Articles:

  • Bear Market Anatomy – The Path and Shape of the Bear Market — Cyclical and event-driven bear markets have both averaged declines of roughly 30%, but cyclical ones last about two years and take five to recover, versus about eight months and one year for event-driven; structural bear markets average 60% declines over three-plus years and take a decade to recover.
  • The Alchemists — NVIDIA's share of all US capital spending is projected to approach two 20th-century peaks by 2026, and large cloud providers would need $400–500bn in new revenue to earn their traditional 50% gross margin on roughly $250bn of annual data center spending. After the dot-com collapse, Corning's fiber optic revenues did not surpass 2000 levels until 2018 in nominal terms.
  • Texas Oil Executives Are Frustrated at Trump for Crushing Crude Prices — West Texas Intermediate crude near $57 sits below the price US oil executives say new wells need to break even, according to a Federal Reserve Bank of Dallas survey, discouraging them from expanding supply. S&P Global Commodity Insights projects $50 oil could cut output by over 1m barrels a day.

AI Summary. European missile maker MBDA ships its unfinished Aster missiles back and forth across the Alps between France and Italy for different production phases, adding months for little industrial benefit. Its chief executive says such problems are harder to fix for a cross-border group balancing the interests of its Airbus, BAE Systems and Leonardo shareholders and the militaries it supplies.

Leila Abboud and Sylvia Pfeifer Financial Times
Date Posted:

The order book of MBDA, best known for building Storm Shadow missiles, has risen to €37B, but the multinational faces difficulties scaling up as it faces political and commercial differences among France, Italy, and the UK and respective shareholders.

Do cross-border ownership conflicts slow European missile production?

Core argument: MBDA ships its unfinished Aster missile across the Alps between France and Italy several times for different production phases, adding months to the process for little industrial benefit.

MBDA’s complex manufacturing process of its powerful Aster missile is a case in point. The unfinished weapon is shipped across the Alps between France and Italy several times for different phases of production, adding months for little industrial benefit. Such problems would be “pretty easy to solve” if MBDA were a normal company, Chief executive Béranger said. But they were much harder for a cross-border defence group that needed to balance the interests of its shareholders — Airbus and Britain’s BAE Systems each hold 37.5% and Italy’s Leonardo 25% — as well as those the militaries it serves. However, a proposal floated last year by Béranger to simplify the manufacturing footprint was rejected by France, which saw the reorganisation as a threat to its leadership in the group and as disruptive to the effort to increase production, said two people familiar with the matter. Nor was the UK particularly supportive, said one of them, and both viewed the proposal as favouring Italy.

Takeaways by Macro Roundup® AI

  1. MBDA ships its unfinished Aster missile across the Alps between France and Italy several times for different production phases, adding months to the process for little industrial benefit.
  2. MBDA is owned by Airbus and BAE Systems with 37.5% each and Italy's Leonardo with 25%, and Chief Executive Béranger said such manufacturing problems would be "pretty easy to solve" at a normal company but are harder for a cross-border group balancing shareholder and military interests.
  3. France rejected Béranger's proposal to simplify MBDA's manufacturing footprint, viewing it as a threat to French leadership of the group and disruptive to raising production, while the UK was not particularly supportive and both saw it as favouring Italy, according to people familiar with the matter.

Related Articles:

  • Germany’s Spending Push Drives Up Borrowing Costs Across Eurozone — Germany's planned defence spending has pushed 10-year German government bond yields close to 3%, lifting borrowing costs across the eurozone because German debt serves as the bloc's benchmark. Investors warn this intensifies pressure on heavily indebted economies; one simulation projects Italy's debt-to-GDP ratio reaching 153% and France's 122% by 2030 absent spending cuts or faster growth.
  • The Costly End of Europe’s ‘Peace Dividend’ — European leaders are debating raising defence spending to 3.5% of GDP or more, a level not seen in continental Europe since the late 1960s. Sustaining that share from 1995 to 2023 would have required an extra $387bn a year across EU member states and $35bn a year for the UK, according to Financial Times calculations.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.

Tuesday, April 15, 2025

AI Summary. After broad-based US tariffs were announced, stock prices fell, volatility jumped and Treasury yields rose — conditions that normally lift the dollar as a haven — yet the dollar fell instead. Relative to a simple econometric model, the dollar's decline was the largest prediction error in four years.

Steven Kamin Financial Times
Date Posted:

Recent moves in the dollar are at odds with historical patterns, in which spikes in the VIX drove a flight to dollar assets. “At least during this episode, the dollar has stopped acting like a ‘flight-to-safety’ currency.” @steven_kamin @AEIecon

Did the dollar stop behaving like a safe haven after tariffs?

Core argument: Following President Trump's 2 April broad-based tariff announcement, the dollar fell by the largest margin relative to a simple econometric model's predictions of any episode in the past four years.

In the wake of President Trump’s initial salvo of broad-based tariffs, on 2 April, stock prices plunged, volatility as measured by the VIX index soared, and Treasury yields shot up substantially. Ordinarily, these developments would be expected to buoy the value of the dollar, a “flight-to-safety” currency sought out by investors during times of crisis and acute uncertainty. Instead, the value of the dollar, too, plunged. In fact — relative to the predictions of a simple econometric model — the dollar fell by the greatest margin in the past four years. There are, of course, many misses between predicted and actual levels of the dollar, but the Trump tariff episode at the end of the sample appears to represent the largest such error. The model expects the spike in the VIX to substantially boost the dollar, but instead the dollar fell. The miss on the dollar is extraordinarily large. Does this mean the end of dollar dominance? Probably not. But it is clear that, at least during this episode, the dollar has stopped acting like a “flight-to-safety” currency.

Takeaways by Macro Roundup® AI

  1. Following President Trump's 2 April broad-based tariff announcement, the dollar fell by the largest margin relative to a simple econometric model's predictions of any episode in the past four years.
  2. Stock prices plunged, the VIX soared, and Treasury yields rose substantially after the 2 April tariffs, conditions that would ordinarily lift the dollar as a flight-to-safety currency, yet the dollar declined instead.
  3. The episode probably does not mean the end of dollar dominance, but the dollar stopped acting as a flight-to-safety currency during it.

Related Articles:

  • Dollar Downgrade — The author argues that rising 10- and 30-year US Treasury yields do not show up in long-term inflation expectations, judging by the spread between inflation-indexed and non-indexed Treasury bonds. The author attributes the increase instead to a shift in demand away from long-dated US debt, reinforcing higher long-term real interest rates.
  • Victory Over Inflation Now Seems So Yesterday — The dollar fell more than 3% against the Swiss franc, widely regarded as the safest haven currency, reaching a level last seen during the 2011 US debt ceiling standoff. The moves in bond and currency markets point to a significant loss of confidence in the US.
  • The Dollar and the Bond Market’s Ominous Message for Trump — JPMorgan Chase estimates Treasury yields rise a third of a percentage point for each $300bn decline in foreign official holdings of US Treasuries. Carlyle Group notes gold has strongly outperformed inflation-protected Treasuries, suggesting gold is now the world's preferred safe-haven asset as reserve managers grow more hesitant to add Treasury exposure.

AI Summary. Bid-ask spreads on investment-grade corporate bonds have widened, with transaction costs rising materially more for older, smaller "off-the-run" issues — which make up about 50% of the investment-grade market by count — than for large, recently issued bonds. This points to a liquidity divide in which off-the-run paper is effectively a buy-and-hold investment.

Torsten Sløk Apollo
Date Posted:

In a further sign of the run on liquidity following April 2, the bid-ask spread on off-the-run investment-grade bonds (those >2 years old with deal sizes <$900mm) has risen to 20 bps from 10 bps, leaving off-the-run paper “virtually untradeable.”

Is a liquidity divide emerging within investment-grade corporate bond markets?

Core argument: Off-the-run investment grade bonds — those issued more than two years ago with deal sizes under $900 million — make up 50% of the IG market by count, and their transaction costs have risen materially since the April 2 tariff announcement.

My colleague Shobhit Gupta has calculated bid-ask spreads for investment grade (IG) bonds based on trader quotes. Liquid securities are defined as $1 billion-plus deals issued in the past year. Off-the-run bonds are those issued more than two years ago with deal sizes less than $900 million, and these bonds make up 50% of the IG market by count. Bid-ask spreads have spiked post the April 2 tariff announcement. The gap between liquid and illiquid bonds is particularly noteworthy. In 2020, the bid-ask spread widened across the whole market. But this time around, transaction costs have increased materially more for off-the-run paper. This highlights the growing liquidity divide in the public IG market. Liquidity in on-the-run bonds has improved, but off-the-run paper has become virtually untradeable and effectively a buy-and-hold investment.

Takeaways by Macro Roundup® AI

  1. Off-the-run investment grade bonds — those issued more than two years ago with deal sizes under $900 million — make up 50% of the IG market by count, and their transaction costs have risen materially since the April 2 tariff announcement.
  2. Shobhit Gupta's bid-ask spread calculations from trader quotes show liquidity in on-the-run IG bonds, defined as $1 billion-plus deals issued within the past year, has improved while off-the-run paper has become virtually untradeable and effectively buy-and-hold.
  3. Unlike 2020, when bid-ask spreads widened across the entire investment grade market, the post-tariff spike has raised transaction costs materially more for off-the-run bonds, highlighting a growing liquidity divide in the public IG market.

Related Articles:

  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • Our Thoughts on Large US Deficits and Their Impact on Bond Yields — Total borrowing in the US is about average despite high government deficits, as high public borrowing has contributed to the need for higher interest rates that have depressed private sector borrowing. Risk premiums on long-dated debt look about average, with no market signs that economic or debt limits are currently being hit.
  • Brazil’s Slow-Burning Economic Crisis Might Be the U.S. Future — Brazil illustrates a feedback loop in which higher interest rates raise debt-servicing costs—now over 7% of GDP—which in turn lift risk premia and inflation expectations, making fiscal policy less sustainable still. U.S. long-term rates have not fallen despite Federal Reserve cuts, partly reflecting an $11tn debt increase and markets pricing the risk that debt is managed through higher inflation.

AI Summary. China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft equipment and parts from US companies. China is forecast to account for 20% of global aircraft demand over the next two decades, though Boeing has redirected some 737 Max jets built for Chinese carriers to Indian airlines.

Bloomberg Staff Bloomberg
Date Posted:

China has ordered its airlines to stop accepting delivery of Boeing aircraft. China is forecast to make up 20% of global aircraft demand over the next two decades. Indian demand for aircraft should soften the loss of the China market.

Is China halting Boeing deliveries as trade tensions escalate?

Core argument: China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft-related equipment and parts from US companies, according to people familiar with the matter.

China has ordered its airlines not to take any further deliveries of Boeing jets according to people familiar with the matter. Beijing has asked that Chinese carriers halt any purchases of aircraft-related equipment and parts from US companies, the people said, asking not to be identified discussing matters that are private. About 10 Boeing 737 Max aircraft are preparing to enter Chinese airline fleets, including two each for China Southern Airlines, Air China and Xiamen Airlines, based on data from Aviation Flights Group. China is forecast to make up 20% of global aircraft demand over the next two decades and in 2018, nearly a quarter of Boeing’s output ended up there. But the US planemaker hasn’t announced a major order in China in recent years due to trade tensions and self-inflicted issues. The impact from Boeing’s loss of market share in China has been softened somewhat by surging demand for new aircraft in other global markets. India’s fast-growing airlines have taken some of the 737 Max aircraft originally built for Chinese carriers.

Takeaways by Macro Roundup® AI

  1. China has ordered its airlines to stop taking deliveries of Boeing jets and to halt purchases of aircraft-related equipment and parts from US companies, according to people familiar with the matter.
  2. About 10 Boeing 737 Max aircraft are preparing to enter Chinese airline fleets, including two each for China Southern Airlines, Air China and Xiamen Airlines, based on Aviation Flights Group data.
  3. China is forecast to account for 20% of global aircraft demand over the next two decades, and in 2018 nearly a quarter of Boeing's output went there, though Boeing has announced no major Chinese order in recent years.

Related Articles:

  • China Steps Up Drive To Break Boeing and Airbus Grip on Plane Market — China's state-backed planemaker Comac has its subsidised C919 single-aisle jet flying domestic routes with Air China, China Eastern and China Southern, and is expanding to a route between Shanghai and Hong Kong. Aviation consultancy IBA projects Comac can lift output from one to 11 aircraft a month, delivering almost 2,000 C919s by 2040.
  • Boeing Battles Brain Drain As Engineers Chase the Allure of Space — The average tenure of a Boeing engineer has fallen from 16.4 years to 12.6 years, according to data from the union representing 12,000 Boeing engineers, with tenure shortening in almost every age bracket. Analysts, recruiters and union officials describe this "brain drain" as a drag on operations that could make launching a new plane harder.
  • China Increases Retaliatory Tariffs On US Imports to 125% — China raised its retaliatory tariffs on US goods from 84% to 125%, and said it would not respond to further US tariff increases because there is no market acceptance for US goods in China at current tariff levels. US duties on Chinese imports have reached as high as 145%.

AI Summary. Apple assembled $22bn of iPhones in India over a 12-month period, up nearly 60% from the prior year, and now makes about one in five of its iPhones there. Most India-made iPhones are assembled at a Foxconn factory in southern India, with Tata Group's electronics arm another key supplier.

Sankalp Phartiyal Bloomberg
Date Posted:

Apple currently manufactures 20% of its iPhones in India, up 60% year-over-year, “a sign of continued diversification away from China.” In 2021, only 1% of iPhones were manufactured in India.

Is iPhone production shifting from China to India?

Core argument: Apple assembled $22 billion of iPhones in India in the 12 months ended March, up nearly 60% from the prior year, in a sign of continued diversification away from China.

Apple assembled $22 billion worth of iPhones in India in the 12 months ended March, increasing production by nearly 60% over the previous year in a sign of continued diversification away from China. The Cupertino, California-headquartered company now makes 20%, or one in five, of its prized iPhones in the South Asian country, according to people familiar with the matter who asked not to be identified as the information isn’t public. The dollar figure represents the devices’ estimated factory gate value, rather than the marked-up retail price. The bulk of India-made iPhones are assembled at Foxconn Technology Group’s factory in southern India. Tata Group’s electronics manufacturing arm, which bought Wistron Corp. and controls Pegatron Corp.’s operations, is also a key supplier.

Takeaways by Macro Roundup® AI

  1. Apple assembled $22 billion of iPhones in India in the 12 months ended March, up nearly 60% from the prior year, in a sign of continued diversification away from China.
  2. India now accounts for 20%, or one in five, of Apple's iPhone output, with the $22 billion figure representing the devices' estimated factory gate value rather than marked-up retail prices.
  3. The bulk of India-made iPhones are assembled at Foxconn Technology Group's factory in southern India, with Tata Group's electronics manufacturing arm — which bought Wistron and controls Pegatron's operations — also a key supplier.

Related Articles:

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AI Summary. Overnight visitors from western Europe to the US fell 17% year-on-year, with declines of more than 20% from countries including Ireland, Norway and Germany, according to the International Trade Administration. Total overseas visitors dropped 12% year-on-year, the steepest decline since pandemic travel restrictions.

Eva Xiao, Philip Georgiadis, John Burn-Murdoch and Claire Bushey Financial Times
Date Posted:

The number of visitors from Western Europe who stayed at least one night in the US is down 17% year-over-year, and overall overseas visitors are down 12% – the sharpest decline since the pandemic period. Tourism drives 2.5% of US GDP.

Are European visits to the US declining sharply?

Core argument: Visitors from western Europe staying at least one night in the US fell 17% in March from a year earlier, according to International Trade Administration data.

Visitors from western Europe who stayed at least one night in the US fell by 17% in March from a year ago, according to the International Trade Administration. Travel from some countries — including Ireland, Norway and Germany — fell by more than 20%, an FT analysis of ITA data showed. The total number of overseas visitors travelling to the US dropped by 12% year-on-year in March, the steepest decline since March 2021 when the travel sector was reeling from pandemic restrictions, according to the ITA data.

Takeaways by Macro Roundup® AI

  1. Visitors from western Europe staying at least one night in the US fell 17% in March from a year earlier, according to International Trade Administration data.
  2. Total overseas visitors to the US dropped 12% year-on-year in March, the steepest decline since March 2021, when the travel sector was reeling from pandemic restrictions, according to ITA data.
  3. Travel to the US from Ireland, Norway and Germany fell by more than 20%, according to an FT analysis of ITA data.

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