Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, June 11, 2025

AI Summary. US Treasury bond yields exceed the rates on synthetic fully secured bonds built from market instruments, with the spread widening by maturity to 0.84% at 30 years. Interpreting that gap as credit risk, and assuming a default would cut promised payments by 50%, the authors calculate cumulative default probabilities of roughly 10% at 10 years and 50% at 30 years.

Victor Haghani and James White Elm Wealth
Date Posted:

US Treasury rates exceed “secured, extra-safe yields for synthetic bonds” computed from market swaps by 51 bps at a 10-year horizon and 84 bps at 30-years, possibly indicating “default to 10-year and 30-year horizons at about 10% and 50%, respectively.”

What does the Treasury yield spread imply about default probabilities?

Core argument: US Treasury yields exceed the rates on fully secured synthetic bonds built from market instruments, with the spread widening by maturity to 0.84% at 30 years.

Table 2 shows normal US Treasury bond yields to the right of secured, extra-safe yields for synthetic bonds we’ve put together from market instruments so that these bonds are fully secured and even safer than normal Treasury bonds. [The swap rates underlying the table are from this link.] Notice that Treasury bonds have higher yields than the rates for secured, extra-safe bonds, and that the spread gets higher with maturity, reaching 0.84% at 30 years. One way to interpret these rates is to see the higher yields as representing some combination of expected loss from a default on US Treasury obligations, and a risk premium for bearing that risk of loss. Assuming that a default would result in a 50% hit to promised payments, and assuming that three-quarters of the spread represents an expectation of default and the other quarter is a risk premium, we calculate the cumulative probability of default to 10-year and 30-year horizons at about 10% and 50%, respectively. To the extent one sees prices of US Treasury bonds through the lens of credit risk, the message being sent by long-term Treasury yields being close to 1% higher than corresponding interest rate swaps is a very sobering one.

Takeaways by Macro Roundup® AI

  1. US Treasury yields exceed the rates on fully secured synthetic bonds built from market instruments, with the spread widening by maturity to 0.84% at 30 years.
  2. The authors interpret that spread as a combination of expected loss from a US Treasury default and a risk premium for bearing that risk.
  3. Assuming a default cuts promised payments by 50% and that three-quarters of the spread reflects default expectations, the authors calculate cumulative default probabilities of about 10% at 10 years and 50% at 30 years.

Related Articles:

  • Interest Rates are Normal, the World is Not — Markets in safe assets are not signaling imminent default or high inflation: the gap between yields on inflation-indexed and conventional US debt is around 2.3%, barely above its 2.1% average since early 2003. The gap between the cyclically adjusted earnings yield on US equities and the real interest rate was last this low in 2007.
  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.
  • Political Risks to the U.S. Safe Harbor Premium — The authors estimate a "shadow" country risk premium for the US of 25–35 basis points rather than the zero conventionally assumed, reflecting US political and institutional risk. If the US premium rose to current UK levels, they project real equity wealth per household would be $50,000 lower and real GDP 1% smaller after 10 years.

AI Summary. China's exports to Indonesia, Malaysia, Thailand and Vietnam hit record highs while its imports from them stayed subdued, which the author reads as evidence of transshipment to circumvent US tariffs. The author argues that as long as US demand stays strong, Chinese goods will reach the US, and decoupling would require curbing domestic demand.

Robin Brooks Robin Brooks Substack
Date Posted:

“China has begun to transship goods to the US via all kinds of countries. April data already showed a big rise in exports. Most of these goods are likely to be transshipments designed to circumvent US tariffs.” @robin_j_brooks.

Do rising Chinese exports to Southeast Asia show tariff circumvention?

Core argument: China's exports to Indonesia, Malaysia, Thailand and Vietnam all hit all-time highs in April 2025, the month US tariffs on China briefly reached 150 percent, while China's imports from those four countries remained subdued.

The charts show China’s exports (black) and imports (blue) to and from various countries in Asia: Indonesia (top left), Malaysia (top right), Thailand (bottom left) and Vietnam (bottom right). In all cases, China’s exports in April 2025 - the month in which US tariffs on China briefly went to 150 percent - reached new all-time highs, while imports remained subdued. This is - in all likelihood - evidence of big transshipments that are seeking to circumvent US tariffs. These transshipments are painful for Chinese exporters…that likely eat into margins and profitability of Chinese firms. In the face of tariffs, transshipments are thus an inevitable reality. If the US really wants to decouple from China, it needs to cut domestic demand, which a consumption tax or VAT would do. If the Russians can figure out how to get their hands on German cars - even in the face of export controls - China is certainly smart enough to get its goods to the US. If US demand remains strong, Chinese goods will find a way here.

Takeaways by Macro Roundup® AI

  1. China's exports to Indonesia, Malaysia, Thailand and Vietnam all hit all-time highs in April 2025, the month US tariffs on China briefly reached 150 percent, while China's imports from those four countries remained subdued.
  2. The divergence between surging Chinese exports to Southeast Asia and subdued imports is, in all likelihood, evidence of large transshipments circumventing US tariffs, at a cost to Chinese firms' margins and profitability.
  3. Genuine US decoupling from China would require cutting domestic demand through a consumption tax or VAT, since strong US demand will draw Chinese goods in regardless of tariffs.

Related Articles:

  • China Circumvents US Tariffs By Shipping More Goods Via Mexico — An analysis of trade data indicates China is shipping more goods to the US via Mexico, circumventing US tariffs, with containers shipped from China to Mexico rising to 881,000 from 689,000 over comparable nine-month periods. Mexico has overtaken China as the largest exporter of goods to the US.
  • Trump’s Tariffs and China Collide to Shock the $115 Trillion Global Economy — Bloomberg Economics projects that if US tariffs stand and targeted countries retaliate with duties half as large, US goods imports would be about 30% lower by 2030 than otherwise, with China's exports to the US falling 85%. China is expected to redirect most of those exports to other markets, amplifying pressure on economies already losing US sales.

AI Summary. Undocumented workers make up a substantial share of homebuilding occupations, with construction laborers the most affected by mass deportation, according to estimates from the Center for American Progress. The author argues that any wage gains for some American workers would be outweighed by higher housing costs, reduced housing supply, and construction delays.

Aziz Sunderji Home Economics
Date Posted:

The Center for American Progress estimates that there are 446,000 undocumented construction workers in the US, more than a fifth of the total. Deporting them would cause “increased housing costs, reduced housing supply, [and] construction delays.”

Will deporting undocumented construction workers raise housing costs?

Core argument: Construction laborers would be affected most intensely by mass deportation, according to estimates from the Center for American Progress on employment levels and the share of undocumented workers in each homebuilding occupation.

The chart shows the size of various homebuilding occupations. The vertical height of each bar represents the number of people employed in each occupation, while the horizontal width represents the proportion of each occupation comprised of undocumented workers, according to estimates from the Center for American Progress. The size of each block therefore represents the number of undocumented workers across occupations. Mass deportation would affect construction laborers most intensely. Research shows that immigrant workers often complement rather than compete with native-born workers. The two fill different labor market niches. In fact, foreign workers can actually increase productivity and wages for some domestic workers. While removing undocumented workers might increase wages for some American workers, these gains would be outweighed by broader negative effects: increased housing costs, reduced housing supply, construction delays, and overall economic inefficiency.

Takeaways by Macro Roundup® AI

  1. Construction laborers would be affected most intensely by mass deportation, according to estimates from the Center for American Progress on employment levels and the share of undocumented workers in each homebuilding occupation.
  2. Any wage gains for some American workers from removing undocumented workers would be outweighed by higher housing costs, reduced housing supply, construction delays, and overall economic inefficiency.
  3. Research indicates immigrant workers often complement rather than compete with native-born workers by filling different labor market niches, and foreign workers can increase productivity and wages for some domestic workers.

Related Articles:

  • The Strange and Awful Path of Productivity in the U.S. Construction Sector — U.S. construction sector labor productivity and total factor productivity grew faster than the whole economy in the 1950s and 1960s, then fell, ending 2020 below their 1950 levels while economywide labor productivity and total factor productivity were 290% and 230% higher. Construction labor productivity fell about 1% a year from 1970 to 2020.
  • Construction Industry Braces for One-Two Punch: Tariffs and Deportations — Immigrants make up more than half of construction trade workers in Texas, California, New Jersey, and the District of Columbia, and undocumented workers are estimated at 13% of the construction industry, more than twice their share of the overall workforce. Roughly 130,000 newly arrived immigrants have joined the industry, bringing foreign-born construction employment to a record.
  • Why Has Construction Productivity Stagnated? The Role of Land-Use Regulation — Homes built per construction worker boomed after World War II and fell after 1970, a decline the authors link to local land-use regulation that limits project size and keeps construction firms small and less productive. They estimate US residential builders would be roughly 60% more productive if their size distribution matched manufacturing.

AI Summary. Japanese births fell to a record low of 686,000 in 2024, dropping below 700,000 for the first time since 19th-century records began and reaching a level Japan's official median population forecast had not projected until 2039. Because the government bases economic and fiscal policy on that median forecast, adopting lower estimates would require revising projections for taxes and pension benefits.

Leo Lewis Financial Times
Date Posted:

Births in Japan fell to < 700,000 in 2024 for the first time since records began in the 19th century, 15 years ahead of the IPSS median forecast. Analysts are urging the government to use lower birth data for policy analysis.

Should fiscal policy adopt lower population forecasts after births undershoot projections?

Core argument: Japanese births fell to 686,000 in 2024, dropping below 700,000 for the first time since record-keeping began in the 19th century, a figure that excludes children born to non-Japanese people.

Births in Japan plunged to a record low: there were a total of 686,000 Japanese births in 2024, falling below 700,000 for the first time since records began in the 19th C. The median forecast produced by the National Institute of Population and Social Security Research (IPSS) in 2023 did not foresee the number of annual births — which does not include children born to non-Japanese people — dropping into the 680,000 range until 2039. The government’s pivotal economic policy document — the first blueprint for macroeconomic management produced by the cabinet of Prime Minister Shigeru Ishiba on June 6 — relies on the median population forecasts. The arrival at that level 15 years ahead of schedule is critical because the government uses that median forecast when formulating economic and fiscal policy. “If the government changes the assumptions for future birth rate and population structure, it would also need to change many forecasts related to future social welfare. Adopt the lower estimate, and the government will need to tell people to accept higher tax and lower pension benefits in the future,” noted Masatoshi Kikuchi, chief equity strategist at Mizuho Securities.

Takeaways by Macro Roundup® AI

  1. Japanese births fell to 686,000 in 2024, dropping below 700,000 for the first time since record-keeping began in the 19th century, a figure that excludes children born to non-Japanese people.
  2. The 2023 median forecast from Japan's National Institute of Population and Social Security Research did not expect annual births to fall into the 680,000 range until 2039, placing the decline 15 years ahead of schedule.
  3. The first macroeconomic blueprint from Prime Minister Shigeru Ishiba's cabinet, produced June 6, relies on the median population forecasts, and Mizuho Securities strategist Masatoshi Kikuchi said adopting the lower estimate would require telling people to accept higher taxes and lower pension benefits.

Related Articles:

  • The Demographic Future of Humanity: Facts and Consequences — The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.
  • The Power of Demography and the Fate of East Asia — East Asia's total population has peaked and is projected to decline for at least a generation, with the pace of decline likely accelerating each decade, while US population is projected to keep growing for decades. The author argues such sustained divergence can shift the global balance of power.
  • World Depopulation: Prospects and Implications — The US is projected to account for a growing share of the rich world's labor force, youth, and highly educated talent, with continuing population and labor force growth and only moderate aging through 2050. Its fertility, though below replacement, exceeds that of East Asian and nearly all European countries, and sustained legal immigration is essential to this demographic advantage.

AI Summary. Canada plans to meet the North Atlantic Treaty Organization target of spending 2% of gross domestic product on defense, raising defense outlays to nearly C$63bn from projected expenditures of about C$35bn, after spending 1.37% of output on defense. The government says it will fund the increase through savings across the federal public sector rather than tax increases.

Paul Vieira Wall Street Journal
Date Posted:

To raise Canada’s contribution to NATO from a projected 1.37% to its 2% commitment, Prime Minister Carney will look for savings across the federal public sector.

Can Canada nearly double defense spending without raising taxes?

Core argument: Canada plans to spend nearly C$63 billion on defense in fiscal 2025-26, up from roughly C$35 billion projected in budgetary documents filed last month, to meet NATO's commitment of 2% of GDP.

Carney on Monday unveiled a plan for Canada this year to meet its North Atlantic Treaty Organization commitment to spend 2% of gross domestic product on defense. Canada spent 1.37% on defense in 2024, ahead of only Belgium, Luxembourg, Slovenia and Spain. Canada intends to spend nearly C$63 billion Canadian dollars on defense in the fiscal 2025-26 year—a big jump from projected expenditures of about C$35 billion based on budgetary documents filed in the legislature last month. The Canadian government has no plans to raise taxes to help pay for the increased expenditures on defense, Carney said, adding that his government just cut taxes for middle-income earners. To finance the higher spending, Carney said officials have just started to look for savings across the federal public sector. [He] pledged during his successful campaign to balance the government’s operating budget.

Takeaways by Macro Roundup® AI

  1. Canada plans to spend nearly C$63 billion on defense in fiscal 2025-26, up from roughly C$35 billion projected in budgetary documents filed last month, to meet NATO's commitment of 2% of GDP.
  2. Canada spent 1.37% of GDP on defense in 2024, ahead of only Belgium, Luxembourg, Slovenia and Spain.
  3. Carney ruled out tax increases to fund higher defense spending, noting his government just cut taxes for middle-income earners, and said officials have started looking for savings across the federal public sector.

Related Articles:

  • Nato’s European Members Discuss 3% Target for Defence Spending — European members of NATO are discussing raising their defence spending target from 2% of GDP to 2.5% in the short term and 3% by 2030, according to people involved in the preliminary talks. Such an increase would strain national budgets and has raised misgivings in many capitals.
  • The Age-Old Question: How Do Governments Pay For Wars? — Denmark abolished a centuries-old religious holiday, requiring people to work that day, partly to help pay for extra defence spending, a move 70% of Danes opposed in one poll. The Stockholm International Peace Research Institute calculates global defence spending rose 4% to a record $2.24tn and is set to keep rising even as higher interest rates raise governments' borrowing costs.

Thursday, June 12, 2025

AI Summary. The authors estimate that geographic exposure to prescription-opioid marketing raised drug-related mortality and reliance on public transfer programs, and continuously increased the Republican vote share in House, presidential, and gubernatorial elections. They estimate a one-standard-deviation increase in exposure raised the Republican House vote share by 4.5 percentage points.

Carolina Arteaga and Victoria Barone National Bureau of Economic Research
Date Posted:
Is Database:
Database

Regions with high cancer mortality in 1996 saw increased drug-related mortality in non-cancer patients and reliance on public transfers, and a rise in the GOP vote share in elections for the House, president, and governor from the mid-2000s to 2022.

Does exposure to opioid marketing raise Republican vote share?

Core argument: The authors estimate that by the 2022 House elections, a 1 standard deviation increase in exposure to the opioid epidemic raised the Republican vote share by 4.5 percentage points, with continuous increases from the mid-2000s to 2022.

We establish a causal connection between the opioid epidemic and the political realignment between the Republican and Democratic parties. At the dawn of the opioid epidemic in 1996, marketing [to] the cancer pain market expanded within the same geographic areas to the much larger non-cancer pain market. We exploit the [resultant] geographic variation in cancer mortality as a proxy for the cancer pain market served by pharma companies and use it as a quasi-exogenous measure of exposure to the crisis. Geographic variation in the marketing of prescription opioids serves as a quasi-exogenous source of exposure to the epidemic. We use this variation to document significant increases in drug-related mortality and greater reliance on public transfer programs. This induced economic hardship led to substantial changes in the political landscape of the communities most affected by the opioid epidemic. We estimate that from the mid-2000s to 2022, exposure to the opioid epidemic continuously increased the Republican vote share in House, presidential, and gubernatorial elections. By the 2022 House elections, a 1SD increase in our measure of exposure led to a 4.5 percentage point increase in the Republican vote share.

Takeaways by Macro Roundup® AI

  1. The authors estimate that by the 2022 House elections, a 1 standard deviation increase in exposure to the opioid epidemic raised the Republican vote share by 4.5 percentage points, with continuous increases from the mid-2000s to 2022.
  2. The authors use geographic variation in cancer mortality as a proxy for the cancer pain market that pharmaceutical companies served in 1996 before expanding opioid marketing in the same areas to the much larger non-cancer pain market, treating it as quasi-exogenous exposure.
  3. Areas more exposed to prescription opioid marketing show increases in drug-related mortality and greater reliance on public transfer programs, economic hardship the authors link to shifts in the political landscape across House, presidential, and gubernatorial elections.

Related Articles:

  • Democracy and the Opioid Epidemic — Using US commuting zone data and the concentration of early prescription opioid marketing in cancer pain markets, the authors estimate that exposure to the opioid epidemic substantially increased the Republican vote share in congressional and presidential elections, with a one standard deviation rise in initial cancer mortality corresponding to 13.8 percentage points.
  • Thick Market Externalities and the Persistence of the Opioid Epidemic — Using county-level data on opioid deaths, shipments, friendship links and distance, the authors estimate large spillovers in opioid use and deaths across areas, with a shock raising deaths by 1 in one county causing 0.38 to 0.76 additional deaths elsewhere. They estimate such spillovers account for 84–92% of opioid deaths and are the main reason the epidemic has persisted.
  • Importing the Opioid Crisis? International Trade and Fentanyl Overdoses — A study using U.S. mortality and import data finds a positive state-level association between imports per resident and drug overdose death rates, driven by fentanyl and accounting for an estimated 15,000–20,000 deaths per year. The authors estimate that 10% higher imports per resident is associated with an 8.1% higher fentanyl death rate.

AI Summary. The extra compensation investors demand to hold 10-year Treasury notes rather than continually rolling over short-term bills has risen 0.9 percentage point over the past year to its highest level since 2014, evidence that US government borrowing costs have increased because of heavy federal spending. Without a buyers' strike in Treasuries, lawmakers have little incentive to curb deficits.

Robert Burgess Bloomberg
Date Posted:

In spite of a bill that the CBO forecasts will add $2.4T to US budget deficits over the next 10 years and a Moody’s downgrade, investors bid 2.52x the offer in yesterday’s Treasury auction, ”a worrying sign for fiscal conservatives,” Burgess writes.

Are federal borrowing costs rising because of heavy government spending?

Core argument: The term premium on the 10-year Treasury note has risen 0.9 percentage point over the past year to its highest level since 2014, which the author cites as evidence that US borrowing costs have climbed because of profligate government spending.

It’s no wonder that lawmakers have little incentive to get the government’s fiscal house in order, which could just exacerbate the economic and financial damage if a buyer’s strike [for Treasuries] does emerge. Perhaps Washington would think differently about debt and deficits if the so-called bond vigilantes sent a shot across its bow, like they did in the UK a few years ago when they balked at financing then Prime Minister Liz Truss’s foolhardy fiscal spending package. Nevertheless, there’s ample evidence that the US government’s borrowing costs, and by extension those of businesses and households, have risen because of its profligate spending ways. One such measure is the term premium on the 10-year Treasury note, which is essentially the extra compensation investors demand to own long-term bonds rather than holding and continually rolling over short-maturity securities such as Treasury bills. It has jumped 0.9 percentage point over the past year to the highest since 2014.

Takeaways by Macro Roundup® AI

  1. The term premium on the 10-year Treasury note has risen 0.9 percentage point over the past year to its highest level since 2014, which the author cites as evidence that US borrowing costs have climbed because of profligate government spending.
  2. The author argues that higher federal borrowing costs extend to businesses and households, and describes the term premium as the extra compensation investors demand to hold long-term bonds rather than continually rolling over short-maturity securities such as Treasury bills.
  3. The author contends that absent a warning shot from bond vigilantes, like the one that met Liz Truss's UK fiscal spending package, lawmakers have little incentive to repair public finances, which could worsen the damage if a Treasury buyer's strike emerges.

Related Articles:

  • Bond Vigilantes Snooze As Treasury Market Shrugs Off Vast US Borrowing — The 10-year US Treasury yield has fallen from a peak of 5% to 4.3% as inflows into US bond funds reached their highest level since 2021, despite heavy government borrowing. Goldman Sachs projects the stock of outstanding Treasuries will rise by $1.7tn this year, weighted more toward longer-dated bonds that are riskier for investors.
  • 10 Facts About the US Treasury Market: Monitoring Demand For US Government Debt — US government debt is projected to rise from 100% to 200% of GDP, with deficits above $1tn annually over the next decade and $9tn of debt maturing within 12 months. Debt servicing costs equal 12% of total government outlays, and interest payments have doubled from about $1bn per day before the pandemic to nearly $2bn per day.

AI Summary. China's export permitting system for rare earths and other critical minerals is detailed enough that Beijing is developing a granular understanding of where every kilogram it produces ends up and why. Bottlenecks emerged as China slowed approvals for magnets containing even minuscule amounts of seven rare earths, alongside limits on sales of the raw elements.

Martin Ritchie, Alberto Nardelli, and Laura Curtis Bloomberg
Date Posted:

China has weaponized its dominance in rare earths trade to shift the trade negotiation balance, demonstrating its ability to secure concessions from countries by curtailing supply.

How does China's rare earth export permitting give it leverage?

Core argument: JL Mag Rare-Earth Co., a major Chinese producer of rare-earth magnets, said it received export permits for countries including the US, and its Hong Kong-listed shares rose as much as 12%.

[Following US-Chinese negotiations], a major Chinese manufacturer of rare-earth magnets, JL Mag Rare-Earth Co., said it received export permits to countries including the US. Its Hong Kong-listed shares surged as much as 12%. But confusion remained about a backlog of requests, with the Wall Street Journal reporting that Beijing is putting a six-month limit on licenses for rare earth exports. And China is unlikely to allow companies to build up inventories, especially in the defense industry. New permitting China established around exporting rare earths and other critical minerals is so detailed that Beijing is building up a sophisticated understanding of where every kilogram that it produces is ending up and why, according to [anonymous sources] citing the sensitivity of the issue. In the latest flare-up, bottlenecks emerged when China slowed approvals for products — mainly magnets — containing even miniscule amounts of seven rare earths, in addition to limiting sales of the raw elements.

Takeaways by Macro Roundup® AI

  1. JL Mag Rare-Earth Co., a major Chinese producer of rare-earth magnets, said it received export permits for countries including the US, and its Hong Kong-listed shares rose as much as 12%.
  2. Beijing is putting a six-month limit on rare earth export licenses, the Wall Street Journal reported, while confusion persists over a backlog of requests and China is unlikely to let companies build up inventories, especially in defense.
  3. China's new permitting rules for rare earths and other critical minerals are so detailed that Beijing is building a sophisticated understanding of where every kilogram it produces ends up and why, according to people citing the issue's sensitivity.

Related Articles:

  • China’s Curb On Metal Exports Reverberates Across Chip Sector — China announced export curbs on gallium and germanium, metals used in chipmaking that the US government classifies among dozens of minerals critical to economic and national security.
  • China Weighs Export Ban For Rare-Earth Magnet Tech — China is weighing rules that would ban or restrict exports of technology used to process and refine rare-earth elements and to make high-performance rare-earth magnet alloys. China accounts for roughly 70% of global rare-earth production, down from about 90% a decade earlier, and retains a tight hold on refining.

AI Summary. Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

Olaf Storbeck and Leslie Hook Financial Times
Date Posted:

Gold accounted for 20% of global official reserves in 2024, outstripping the euro’s 16%, and second only to the US dollar at 46%. The price has risen 27% this year to an historic nominal high of $3,500/troy ounce.

Has gold surpassed the euro as a global reserve asset?

Core argument: Central bank gold reserves rose to 36,000 tons in 2024, approaching the mid-1960s peak of 38,000 tons, with gold overtaking the euro as a global reserve asset, according to ECB figures.

Central bank gold reserves, which peaked at 38,000 tons in the mid-1960s, rose again to reach 36,000 tons in 2024, according to the latest ECB numbers. A 30% rise in the gold price last year was one factor behind the surge in gold’s share of global foreign reserves. Large buyers last year included India, China, Turkey and Poland, according to the World Gold Council. The central bank’s analysis showed that “countries that are geopolitically close to China and Russia” bulked up on gold more than others over the past three years. In recent years, central banks have also been trying to diversify away from the US dollar amid concerns about geopolitical instability and US debt levels. The de-dollarization trend accelerated, particularly among developing countries, after the Russian invasion of Ukraine, when the US targeted Russia’s access to financial markets. The ECB noted: “If history is any guide, further increases in the official demand for gold reserves may also support further growth in global gold supply.”

Takeaways by Macro Roundup® AI

  1. Central bank gold reserves rose to 36,000 tons in 2024, approaching the mid-1960s peak of 38,000 tons, with gold overtaking the euro as a global reserve asset, according to ECB figures.
  2. A 30% rise in the gold price last year was one factor behind the increase in gold's share of global foreign reserves, with India, China, Turkey and Poland among the large buyers, according to the World Gold Council.
  3. The ECB's analysis showed countries geopolitically close to China and Russia bulked up on gold more than others over the past three years, with de-dollarization accelerating among developing countries after Russia's invasion of Ukraine and US moves against Russia's financial market access.

Related Articles:

  • Gold Rising — China appears to be shifting its reserve diversification toward gold, but its gold allocation remains well below that of other countries at odds with the United States, such as Russia and Turkey, which raised their gold holdings substantially. Gold held in domestic custody sits outside U.S. influence.
  • Rich Countries Plan to Buy More Gold Despite Record Price — A World Gold Council survey finds almost 60% of advanced-economy central banks expect gold's share of global reserves to rise over the next five years at the expense of the US dollar, up from 38% a year earlier. About 13% plan to increase their own gold holdings within a year, the highest share recorded in the survey.
  • Asia’s $7.5 Trillion Bet on US Assets Is Suddenly Unravelling — Asia's 11 largest economies have accumulated $7.5tn in US stocks and bonds, but their annual capital flows into the US fell to $68bn, equal to just 11% of their trade surpluses with the US. Their major currencies, including the yen and yuan, trade on average 57% below exchange rates adjusted for living-cost differences.

AI Summary. IBM has laid out a roadmap for building a fault-tolerant quantum computer by 2029, citing advances in reducing errors in quantum bits and a technique for identifying and correcting errors in real time using conventional computing. Amazon and Google are also pursuing quantum error correction with dedicated chips.

Belle Lin and Isabelle Bousquette Wall Street Journal
Date Posted:

IBM Quantum Starling aims to achieve 20,000x the compute of current quantum computers by 2029, leveraging advanced error-correction techniques to ensure fault tolerance.

Is error correction bringing fault-tolerant quantum computing within reach?

Core argument: IBM's VP of Quantum, Gambetta, attributes the company's confidence in delivering a fault-tolerant quantum computer by 2029 to advances in a new error-reduction approach plus a technique for identifying and correcting errors in real time using conventional computing.

Quantum computers store information as quantum bits and are much richer objects than the binary digits that ordinary computers use. But one of quantum computing’s major problems is that qubits generate errors as they tackle problems. Gambetta, IBM’s VP of Quantum, said IBM’s confidence in its 2029 timeline stems from two recent developments: further advances in a new approach to reducing errors plus a technique for identifying and correcting errors in real-time using conventional computing. IBM isn’t the only one that has promised a fault-tolerant computer by 2029. Others have recently made progress in the area of error correction, including Amazon, with its Ocelot quantum computing chip, which it said can reduce quantum errors by up to 90%. Google is also focused on error correction with its Willow chip. IBM is releasing more detailed plans for its large-scale quantum computer at this point because it hopes to spur developers’ interest in creating quantum algorithms—a key part of the software that will run on quantum computers. That’s critical to achieving a return on investment for quantum computers.

Takeaways by Macro Roundup® AI

  1. IBM's VP of Quantum, Gambetta, attributes the company's confidence in delivering a fault-tolerant quantum computer by 2029 to advances in a new error-reduction approach plus a technique for identifying and correcting errors in real time using conventional computing.
  2. Amazon says its Ocelot quantum computing chip can reduce quantum errors by up to 90%, while Google is pursuing error correction with its Willow chip, and IBM is not alone in promising a fault-tolerant machine by 2029.
  3. IBM is releasing more detailed plans for its large-scale quantum computer to spur developers' interest in creating quantum algorithms, which it considers critical to achieving a return on investment for quantum computers.

Related Articles:

  • Physicists Question Microsoft’s Quantum Claim — Physicists outside the work have responded cautiously to Microsoft's topological quantum computing claim, noting that the search for topological qubits and the "Majorana" particles underpinning them has a history of bold announcements later withdrawn. Researchers describe the technology as excruciatingly difficult to actually build.
  • Microsoft’s Majorana 1 Chip Carves New Path for Quantum Computing — Microsoft unveiled Majorana 1, a quantum chip built on a Topological Core architecture using a new materials stack of indium arsenide and aluminum, which the company expects will enable quantum computers capable of solving industrial-scale problems within years rather than decades. The topological superconductor produces a qubit that is fast, small, stable, and digitally controlled.
  • Meet Willow, Our State-of-the-Art Quantum Chip — Google reports that its Willow quantum chip completed a random circuit sampling benchmark computation in under five minutes that one of today's fastest supercomputers would take an estimated 10^25 years to perform. The benchmark is described as the classically hardest test currently runnable on a quantum computer.

AI Summary. Global average sea surface temperature reached 20.79C in May, the second-highest May level on record, while atmospheric carbon dioxide peaked at a global mean of 426 parts per million, up from 423 a year earlier. Scientists estimate the ocean absorbs a quarter to 30% of emitted carbon dioxide and about 90% of excess heat.

Attracta Mooney and Steven Bernard Financial Times
Date Posted:
Is Database:
Database

The world’s ocean temperatures reached the second-highest level on record for May, capping an “alarming” two-year streak of rapid warming. Atmospheric concentrations of CO2 hit their highest seasonal peak since records began, a global mean of 426 ppm.

Are ocean temperatures staying near record highs as carbon dioxide rises?

Core argument: Atmospheric CO₂ peaked globally at a mean of 426 parts per million in March, up from 423 ppm a year earlier, and surpassed 430 ppm at the Mauna Loa Observatory in Hawaii.

The world’s ocean temperatures reached the second-highest level on record for May, capping an “alarming” two-year streak of rapid warming and fueling concerns about the seas’ ability to absorb rising levels of carbon dioxide. The EU’s Earth observation service Copernicus said the global average sea surface temperature in May was 20.79C, 0.14C below the record in the same month in 2024. The level of CO₂ in the atmosphere peaked globally at the mean of 426 parts per million in March, up from 423 ppm a year ago, and surpassed 430 ppm at the Mauna Loa Observatory in Hawaii. Scientists estimate the ocean has absorbed between a quarter and about 30% of carbon dioxide released into the atmosphere and about 90% of excess heat, helping to keep temperatures on land cooler. But Michael Meredith, a scientist at the British Antarctic Survey in Cambridge, warned the ocean “may lose some of its capacity to buffer us against the worst extremes of climate change” by absorbing less warmth or carbon than previously. “We’re seeing stronger and stronger bursts of ocean warming — marine heatwaves — that are pushing us past records at an alarming rate.”

Takeaways by Macro Roundup® AI

  1. Atmospheric CO₂ peaked globally at a mean of 426 parts per million in March, up from 423 ppm a year earlier, and surpassed 430 ppm at the Mauna Loa Observatory in Hawaii.
  2. Scientists estimate the ocean has absorbed between a quarter and about 30% of carbon dioxide released into the atmosphere and about 90% of excess heat, and Michael Meredith of the British Antarctic Survey warned it may lose some of that buffering capacity.

Related Articles:

  • Long-term Surface Impact of Hunga Tonga-Hunga Ha’apai-like Stratospheric Water Vapor Injection — A volcanic eruption that injected large amounts of water vapor — a strong greenhouse gas — into the stratosphere is estimated to have raised surface temperatures by more than 1.5°C across large regions for several years, while cooling some areas by close to 1°C. The authors suggest a possible link to tropical Pacific sea surface temperatures that warrants further investigation.
  • Abrupt Reduction In Shipping Emission As An Inadvertent Geoengineering Termination Shock Produces Substantial Radiative Warming — Fuel regulations that abruptly cut sulfur dioxide emissions from international shipping by about 80% created an inadvertent geoengineering termination shock, and the authors estimate the resulting radiative forcing over the global ocean could double or more the rate of warming in the 2020s relative to the rate since 1980.
  • Take the Under — Downward revisions to global population and GDP projections make climate change appear more tractable, the author argues, since the scenarios used to model emissions rely on socio-economic assumptions that are more extreme than real-world observations. With slower population and economic growth, even partial policy successes could bring emissions consistent with a 2C target within reach.