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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, May 19, 2026

AI Summary. A ceasefire with Iran and reduced risk of extreme downside outcomes let markets compress risk premia, with US equities, high-carry and commodity currencies, and emerging markets recovering even as oil prices and yields stayed elevated. Shortages in commodities and the artificial intelligence supply chain are driving capital flows, pointing to higher volatility alongside further equity gains.

Dominic Wilson and Kamakshya Trivedi Goldman Sachs
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Goldman estimates the market is now pricing US growth at 2.5%, past their own 2027 forecast of 2.2%. After the Iran-ceasefire relief rally, AI-related equities are quietly taking credit for substantial macro benefits that haven’t been delivered yet.

Are shortages in commodities and AI supply chains driving markets higher?

Core argument: The Iran ceasefire and reduced deep downside tails have let markets compress risk premia across assets, a narrowing of the distribution often associated with sharp gains amid fundamental uncertainty.

The Iran ceasefire and the reduction in deep downside tails have allowed the market to look ahead and compress risk premia across a range of assets. That type of narrowing in the distribution is often associated with sharp market gains in situations of fundamental uncertainty, and this has proved to be the case again. Despite oil prices and yields staying elevated, a broad range of assets—including US equities, high carry/commodity FX, and EM—have recovered smartly, and renewed AI optimism has pushed those exposures to new cycle highs. The common element is that shortages—in commodities and the AI supply chain—are driving capital flows. Those tensions mean that even if we avoid the worst tails, we are likely to see volatility rise alongside further equity price increases.

Takeaways by Macro Roundup® AI

  1. The Iran ceasefire and reduced deep downside tails have let markets compress risk premia across assets, a narrowing of the distribution often associated with sharp gains amid fundamental uncertainty.
  2. US equities, high carry/commodity FX, and emerging markets have recovered despite elevated oil prices and yields, with renewed AI optimism pushing those exposures to new cycle highs.
  3. Shortages in commodities and the AI supply chain are driving capital flows, and those tensions point to rising volatility alongside further equity price increases even if the worst tails are avoided.

Related Articles:

  • Shattered Assumptions And The Energy Quandary — The author argues that energy, rather than fixed income, now serves as the true hedge to equity positions, pushing investors, companies and countries to review their energy allocations and policies. Chinese government bonds diversified equity risk when no other major bond market did, which the author attributes to China being the only major economy without a meaningful inflation problem.
  • Gold Heads for Longest-Ever Losing Streak on Iran War Turmoil — Gold is heading for an extended losing streak as the closure of the Strait of Hormuz and damage to Persian Gulf energy infrastructure send crude and natural gas prices surging, raising the prospect of higher interest rates from the Federal Reserve and other central banks.
  • Global Economics Comment: Global Economic Impacts of the War in Iran — The main economic risk to major economies from the war in Iran is that higher energy prices lift inflation and slow growth, with oil near $80/bbl, up 14% since late February. Analysts project oil moderating to $76/bbl and then $65/bbl as the risk premium fades in a structurally oversupplied market.

AI Summary. Foreign holdings of U.S. financial assets are valued at $69tn versus $41tn of U.S. holdings abroad, a gap that has been mounting for decades. With the net liability position in interest-bearing assets at -$15tn, a 1 percentage point rise in interest rates would subtract $150bn from the U.S. net investment income balance.

Matthew Higgins and Thomas Klitgaard Liberty Street Economics
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The US net international investment position worsened by about $16tn between 2019 and 2025, driven by roughly $5.5tn in net inflows and $10tn in valuation losses, as higher rates hit a larger net liability stock, raising interest rate-sensitivity.

How does a growing net liability position affect U.S. investment income?

Core argument: Official estimates put the current market value of foreign holdings of U.S. financial assets at $69tn, against $41tn of U.S. holdings of foreign assets, a shortfall that has been mounting for decades.

Foreign holdings of U.S. financial assets are immense, with official estimates putting their current market value at $69 trillion. U.S. holdings of foreign assets are also impressive but much smaller, at $41 trillion. The shortfall in U.S. foreign assets relative to foreign liabilities has been mounting for decades. Yet U.S. investment income receipts—in profits, dividends, and interest—comfortably exceeded income payments until recently. Payments on U.S. assets owned by foreign investors represent a servicing burden for the U.S. economy. Profits, dividends, and interest payments that would otherwise accrue to domestic investors instead flow abroad. Given the need to sell U.S. assets to finance ongoing trade deficits, this servicing burden seems likely to mount. The related buildup in the U.S. net liability position in interest-bearing assets will also make the income balance more sensitive to swings in interest rates. This increased sensitivity is already in evidence. At present, with the asset-liability gap at -$15 trillion, a 1 percentage point increase in U.S. and foreign interest rates would subtract $150 billion from the U.S. net income balance. (A 1pp fall in rates would result in a similar improvement.) Only five years ago, a 1 percentage point rise in rates would have subtracted $100 billion.

Takeaways by Macro Roundup® AI

  1. Official estimates put the current market value of foreign holdings of U.S. financial assets at $69tn, against $41tn of U.S. holdings of foreign assets, a shortfall that has been mounting for decades.
  2. With the U.S. asset-liability gap in interest-bearing assets at -$15tn, a 1 percentage point rise in U.S. and foreign interest rates would subtract $150bn from the U.S. net income balance, compared with $100bn five years ago.
  3. U.S. investment income receipts in profits, dividends, and interest exceeded income payments until recently, and the servicing burden on foreign-owned U.S. assets seems likely to mount given the need to sell U.S. assets to finance ongoing trade deficits.

Related Articles:

  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.
  • Tariffs and “International Payments Problems” — Foreigners are accumulating more financial claims on Americans than Americans are on foreigners across direct investment, stocks, bonds, currency, deposits, and loans, and the U.S. net international investment position has moved from -20% of GDP in 2010 to -89%. Almost all of that swing reflects valuation gains on U.S. stocks rather than added borrowing.
  • Foreigners Rebuff ‘Sell America’ and Buy a Net $1.6 Trillion in Assets — Treasury Department data show overseas investors bought a net $1.55tn of long-term US financial assets, up from $1.18tn the prior year, including $720bn in equities and just under $409bn in Treasury notes and bonds. China was a net seller of $208.6bn, with its Treasury holdings ending at $683.5bn.

AI Summary. Long-term government bond yields have risen simultaneously across the US, Japan, the UK and France, which Barclays attributes to too much debt, too little fiscal discipline, and no political appetite to address either. Equities have been resilient, though the 10-year Treasury yield now exceeds the S&P 500 earnings yield by the widest margin since the dot-com bust.

John Authers Bloomberg
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Barclays’ Rajadhyaksha on the synchronized bond breakout across the US, Japan, UK and France: “Four countries. Four different political systems. Four different central banks. But the same trade — ‘get me out of duration!’”

Are long-term bonds selling off worldwide while equities stay elevated?

Core argument: Barclays' Ajay Rajadhyaksha attributes the synchronized move out of high-duration bonds in the US, Japan, the UK and France to the developed world having "too much debt, too little fiscal discipline, and no political appetite for fixing either.".

Across the developed markets, bond markets are staging a slow-motion car wreck. Even Japan is joining in now, and the phenomenon is truly global. Looking at the drastic moves in the US, Japan, the UK and France, Barclays’ Ajay Rajadhyaksha commented: “Last week, long bonds broke. Not in one country. In all of them. Simultaneously. Four countries. Four different political systems. Four different central banks. But the same trade — ‘get me out of duration!’” Each country has its own contributing political problems, but the uniformity of the shift out of long-term bonds with high duration makes clear that something broader is afoot. For Rajadhyaksha, it is “simple and uncomfortable.” The developed world “has too much debt, too little fiscal discipline, and no political appetite for fixing either.” Further, equities seem almost alarmingly impervious. Earnings forecasts are surging, and the growth of AI spending is a major counterweight to the hit from Iran. Still, the yield on the 10-year Treasury bond now exceeds the earnings yield on the S&P 500 to an extent not seen since the tail-end of the dot-com bust early in 2002, which should be a major warning signal for stocks.

Takeaways by Macro Roundup® AI

  1. Barclays' Ajay Rajadhyaksha attributes the synchronized move out of high-duration bonds in the US, Japan, the UK and France to the developed world having "too much debt, too little fiscal discipline, and no political appetite for fixing either.".
  2. The 10-year Treasury yield now exceeds the S&P 500 earnings yield to an extent not seen since early 2002 at the tail-end of the dot-com bust, a warning signal for stocks even as earnings forecasts surge alongside AI spending.

Related Articles:

  • War Cost Sinks Long-Term Government Bonds on Deficit Worries — Investor concern that the Iran war will raise government spending and widen budget deficits has triggered a selloff in long-term government bonds, pushing the 30-year US Treasury yield near 4.90% and lifting yields from the UK and Germany to Australia and Japan. A global borrowing wave could further pressure the $31tn US Treasury market.
  • Sudden Japan Bond Crash Unleashes Turmoil on Trading Floors — A selloff in Japanese government bonds sent yields on some maturities to record highs, prompting hedge funds to unwind trades, life insurers to sell bonds, and at least one corporate bond investor to withdraw from a deal. Traders attributed the rout to doubts about Japan's fiscal health amid planned tax cuts and higher spending.
  • Bonds Are Heading for the Best Year Since 2020 — U.S. bonds are on track for their strongest annual returns since 2020 as falling interest rates outweighed earlier concerns that heavy government borrowing would strain the Treasury market. A cooling labor market has prompted two Federal Reserve rate cuts, and the 10-year Treasury yield has declined by nearly half a percentage point to about 4.15%.

AI Summary. Euro-area income per person falls behind the US when measured in constant 2021 prices but gains on the US when measured using each year's prices, suggesting Europe is holding its own in applying technology. The author argues Europe's real risk is being cut off from strategically important technologies.

Paul Krugman Paul Krugman Wonks Out
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In 2021 prices, per capita GDP in the Euro area is falling relative to that of the US, but the opposite is true if one takes into account the benefits to Europe from falling tech prices. “The big benefits of IT come from applying it, [not] creating it.”

Does Europe's income gap with the US depend on price measurement?

Core argument: Euro-area GDP per capita relative to the US declines over the past 25 years when measured in constant 2021 prices, as the World Bank does, but rises when measured at each year's prices (PPP).

Let’s start by looking at GDP per capita in Europe (actually the euro area) as a percentage of GDP per capita in the US. If we do this using constant prices — the World Bank uses 2021 prices — we get the line in Chart 1 labeled “2021 prices.” This line shows Europe falling behind over the past 25 years. If, however, we simply use prices in each given year, we get the line labeled “PPP,” which shows Europe gaining on the US. We get a similar picture if we look at GDP per worker-hour, where the black line is calculated using 2021 prices and the blue line is calculated using PPP. IT progress is passed on to all consumers via lower prices. The big benefits of IT come from applying it, rather than creating it. And as I’ve tried to show, the data show Europe holding its own in the relative value of the goods it produces, indicating that European economies are doing fine when it comes to applying technological advances. What should worry Europe, instead, are the geopolitical implications of US/Chinese leadership in advanced technology. The risk of being cut off from strategically important technologies, once minimal, is now very real. And that risk, rather than misleading numbers about trends in real GDP per worker hour, is what should concern European policymakers.

Takeaways by Macro Roundup® AI

  1. Euro-area GDP per capita relative to the US declines over the past 25 years when measured in constant 2021 prices, as the World Bank does, but rises when measured at each year's prices (PPP).
  2. The same divergence appears in GDP per worker-hour, where the constant-2021-price series and the PPP series point in opposite directions for Europe relative to the US.
  3. The author argues that Europe is holding its own in the relative value of the goods it produces and in applying technological advances, and that the real concern is the risk of being cut off from strategically important technologies amid US and Chinese leadership.

Related Articles:

  • Europe v America: Who’s Really Winning? — Real GDP data show the US economy growing substantially faster than the European Union's, yet on a purchasing-power basis adjusting for price levels, the EU economy remains only slightly smaller than the US, as it was earlier. The author argues US dominance in information technology, where productivity growth is rapid and passed on as lower prices, reconciles the two measures.
  • Europe’s Tech Lag: Does It Matter? — If technology producers face competition, faster measured productivity growth in a tech-specialized country is passed to consumers in both countries through lower prices rather than higher relative living standards. Real GDP per worker over 1998-2024 diverged more between California and the rest of the US than between the US and Europe, largely reflecting industry composition.
  • From IT to AI: What Explains US Productivity Outperformance? — Larger information-technology quality adjustments and hours-worked measurement distortions explain about 30% of the average annual US-Euro area total factor productivity growth gap since 1995, leaving an adjusted gap near 0.25pp. The authors estimate greater US intangible investment spillovers contribute about 0.1pp, more efficient resource allocation about 0.1pp, and better management and larger firms about 0.05pp.

AI Summary. China's holdings of U.S. assets began disappearing from U.S. custodial data after the G-7 immobilized Russia's reserves, and estimating them has grown harder as China diversified away from both U.S. and Belgium-based custodians. Estimates suggest a lower share in long-term Treasuries, more bills, and roughly 10% in agency bonds.

Brad Setser Council on Foreign Relations
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Once you add back what’s hidden in European custodial centers, China’s US bond holdings have fallen less than the headline “China” line suggests. Setser estimates that China’s total US assets are still 50–55% of its reserve portfolio.

Has China's holdings of U.S. assets become harder to track?

Core argument: China's total U.S. financial holdings remain between 50 and 55 percent of its reserve portfolio after an upward adjustment to its estimated Agency holdings, which stand at around 10 percent of total reserves, more than before 2020.

China hasn’t disclosed the currency composition of its reserves since 2020. But it isn’t clear that China’s central bank has shifted its currency composition of its foreign currency holdings around a lot, in part because the dollar share of its reserves was already low (5 percent) and going underweight the dollar means losing yield. But there is no doubt that China’s holdings did start to disappear from the U.S. data right after the G-7 immobilized Russian reserves in early 2022. There is a clear fall around this time in the bonds China holds in U.S. custodians. Estimating China’s true holdings of U.S. assets has gotten harder because it seems like China has diversified not just out of the US, but also out of Euroclear (a large Belgium-based custodian). The overall result suggests that China has reduced the share of its portfolio in long-term Treasuries, while increasing its bill holdings and maintaining a sizeable Agency portfolio of around 10 percent of total reserves (more than before 2020). Zooming the chart in highlights that the key implication of this upward adjustment to China’s estimated holdings of Agencies is that China’s total U.S. financial holdings remain between 50 and 55 percent of its reserve portfolio.

Takeaways by Macro Roundup® AI

  1. China's total U.S. financial holdings remain between 50 and 55 percent of its reserve portfolio after an upward adjustment to its estimated Agency holdings, which stand at around 10 percent of total reserves, more than before 2020.
  2. China's holdings began disappearing from the U.S. data right after the G-7 immobilized Russian reserves in early 2022, with a clear fall in the bonds China holds at U.S. custodians.
  3. China appears to have reduced the share of its portfolio in long-term Treasuries while increasing bill holdings, and estimating its true U.S. asset holdings has grown harder as it diversified out of Euroclear as well.

Related Articles:

  • China Is Not Dumping US Treasuries — China's state-owned financial institutions added $100bn in foreign assets in one month and $70bn the next, absorbing dollars from the country's trade surplus as exporters sought to sell dollars for renminbi. The author argues dollar accumulation has shifted from China's foreign exchange agency to state banks, which either buy Treasuries or lend to investors who do.
  • Foreign Holdings of US Treasuries Climbed to Record in November — Foreign holdings of US Treasuries rose $112.8bn to a record $9.36tn, a figure reflecting both net purchases and valuation changes, according to US Treasury Department data. Increases in Norwegian, Canadian and Saudi holdings offset a $6.1bn decline in China's stockpile to $682.6bn, its lowest since 2008.
  • Foreigners Rebuff ‘Sell America’ and Buy a Net $1.6 Trillion in Assets — Treasury Department data show overseas investors bought a net $1.55tn of long-term US financial assets, up from $1.18tn the prior year, including $720bn in equities and just under $409bn in Treasury notes and bonds. China was a net seller of $208.6bn, with its Treasury holdings ending at $683.5bn.

AI Summary. China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.

Michael Pettis China Financial Markets
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China’s 5% GDP growth in Q1 2025, driven by an 8.9% rise in infrastructure investment, masks falling returns and a rising debt-to-GDP ratio, as political growth targets sustain overinvestment and deepen economic imbalances.

Does technological progress disprove claims of overinvestment?

Core argument: China's technological progress and first-rate infrastructure do not refute the claim of systematic overinvestment, since overinvestment often produces real physical assets and technological advances.

China's rapid technological progress and its first-rate infrastructure are often cited as refuting the claim that China has been systematically overinvesting in non-productive projects for many years. It does not imply that investment fails to produce physical assets or technological progress. On the contrary, overinvestment often results in real improvements in infrastructure and technology. It is nonetheless "overinvestment" if it generates less real value than it costs in resources—including subsidies and transfers. When losses are capitalized, however, they are incorrectly accounted for in the form of an asset that is carried at a value that exceeds its real economic value. They may well be two sides of the same coin and describe different aspects of the same underlying reality: an economy that has achieved extraordinary gains through investment but that must ultimately confront whether the costs of that achievement were justified economically.

Takeaways by Macro Roundup® AI

  1. China's technological progress and first-rate infrastructure do not refute the claim of systematic overinvestment, since overinvestment often produces real physical assets and technological advances.
  2. Investment counts as overinvestment when it generates less real value than it costs in resources, including subsidies and transfers, regardless of the physical assets it creates.
  3. Capitalizing losses records them as assets carried above their real economic value, leaving China to confront whether the costs of its investment-driven gains were economically justified.

Related Articles:

  • China Shock 2.0: The Flood Of High-Tech Goods That Will Change The World — China's record goods trade surplus surpassed $1tn, driven by fierce domestic competition among manufacturers that investors describe as malignant but that yields high-quality products at prices rivals struggle to match. European leaders have called the surge of high-tech Chinese goods an existential threat to their continent's manufacturing.
  • China’s Trade Surplus, Part I — China's very high investment rates, combined with a shrinking workforce and slowing productivity, produce sharply diminishing returns, making its decades-old high-savings, high-investment growth model unsustainable. The author argues China's leaders resist a pivot toward consumption because of ideology and geopolitical ambition, with the leadership rejecting welfare spending as breeding dependency.
  • Can China Continue to Export its Way Out of its Property Slump? — The International Monetary Fund estimates Chinese public sector debt near 125% of GDP and a combined on- and off-balance-sheet fiscal deficit possibly above 12% of GDP. Since the property bubble burst, net exports have added over a percentage point to annual growth on average, with the goods surplus approaching $1.2tn, or 6% of GDP.

Wednesday, May 20, 2026

AI Summary. A survey of firms finds 18% use AI in at least one business function (32% employment-weighted), with adoption concentrated in large firms and knowledge-intensive sectors such as information, professional services, and finance. Scope remains narrow: 57% of adopters use AI in three or fewer functions, 66% use it to augment tasks, and only 2% report employment reductions.

Kathryn Bonney, Cory Breaux, Emin Dinlersoz, Lucia Foster, et al. National Bureau of Economic Research
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Census data show that 18% of US firms used AI in at least one function (32% employment-weighted). 66% say it augments work; only 2% report job cuts, but the deeper firms embed AI into operations, the more employment falls.

How widely are firms adopting AI, and does it reduce employment?

Core argument: AI use concentrates in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70% employment-weighted) among very large firms in Information, Professional Services, and Finance.

During Nov 2025–Jan 2026, 18% of firms used AI in at least one function (32%, employment-weighted), with adoption expected to reach 22% within six months. Use is concentrated in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70%, employment-weighted) among very large firms in Information, Professional Services, and Finance. Among adopters, scope remains limited: 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%). Worker-level use appears in 23% (41%, employment-weighted) of firms, primarily for writing, document analysis, and information search; 65% restrict use to three or fewer tasks. Evidence suggests both top-down and bottom-up diffusion: worker use can occur without firm adoption, and vice versa. Most firms (66%) use AI for task augmentation, while employment reductions are rare (2%).

Takeaways by Macro Roundup® AI

  1. AI use concentrates in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70% employment-weighted) among very large firms in Information, Professional Services, and Finance.
  2. Among adopters, 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%); 66% use AI for task augmentation, while employment reductions are rare (2%).

Related Articles:

  • Firm Data On AI — Survey data show around 70% of businesses use some artificial intelligence technology, with larger, more productive, and higher-paying firms more likely to adopt it. Firms report little employment effect and a modest productivity boost so far, but predict adoption will raise productivity by about 1.4% and cut employment by about 0.7% over three years.
  • Attention (And Money) Is All You Need: Why Universities Are Struggling to Keep AI Talent — The annual compensation gap between top industry and academic artificial intelligence researchers widened from roughly $294,000 to $1.5m, coinciding with accelerating academic out-migration toward large incumbent technology firms. Researchers who move to industry cut paper production by about 63% while increasing patent filings nearly sixfold, consistent with a shift from open science toward proprietary innovation.
  • Waiting for the AI J-Curve — Artificial intelligence has yet to appear in employment, productivity, or inflation data, or in profit margins and earnings expectations outside the largest technology firms. With fierce competition pushing large language model prices toward zero for users, value creation depends on sector-level implementation, and the author argues AI will likely enhance labor in some sectors rather than replace it across all.

AI Summary. Renminbi bonds have outperformed other major bond markets over horizons ranging from year-to-date to the past 10 years, and most countries now trade more with China than with the US. The author argues the world is not deglobalizing but "de-Westernizing," with greater trade with China making countries more willing to save in renminbi.

Charles Gave and Louis-Vincent Gave Gavekal
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Post-covid, Renminbi bonds have outperformed all major bond markets over 1, 3, 5, and 10 years. Charles and Louis-Vincent Gave argue that two parallel worlds are emerging: an inflationary OECD and a deflationary Asia/emerging markets.

Is rising trade with China making countries save in renminbi?

Core argument: Renminbi bonds have outperformed other major bond markets year to date and over the past 12 months, three years, five years, this decade, and the past 10 years.

Renminbi bonds have now outperformed other major bond markets year to date, over the past 12 months, three years, five years, so far this decade, and over the past 10 years. Most countries now trade more with China than with the US. This is arguably the major shift of the past two decades. Put differently, for all the talk of “deglobalization,” the world is not so much “deglobalizing” as “de-Westernizing.” The idea that the world is closing in on itself would sound silly to anyone living in Jakarta, Mumbai, Dubai, or São Paulo. And the more countries trade with China, the more comfortable they become saving in renminbi and buying renminbi bonds to fund future trade. In turn, this implies the coexistence of two worlds: one stable—Asia and emerging markets—and one unstable—the OECD; one inflationary—the OECD—and the other deflationary—Asia and emerging markets.

Takeaways by Macro Roundup® AI

  1. Renminbi bonds have outperformed other major bond markets year to date and over the past 12 months, three years, five years, this decade, and the past 10 years.
  2. Most countries now trade more with China than with the United States, a shift the author calls arguably the major one of the past two decades and a sign the world is "de-Westernizing" rather than deglobalizing.
  3. The author argues that greater trade with China makes countries more comfortable saving in renminbi and buying renminbi bonds, implying two coexisting worlds: a stable, deflationary Asia and emerging markets, and an unstable, inflationary OECD.

Related Articles:

  • Why Global Imbalances Matter — Countries running persistent trade surpluses, such as China, Germany and Japan, have built their economies around an excess supply of tradeable goods and services, leaving them dependent on deficit countries to absorb it. That dependence gives deficit countries bargaining power and exposes surplus countries to pressure to expand domestic demand.
  • Is China’s High-Quality Investment Output Economically Viable? — China's technological progress and infrastructure do not refute claims of overinvestment, since overinvestment often produces real physical assets and technological gains yet still counts as overinvestment when it generates less real value than the resources, subsidies, and transfers it consumes. When such losses are capitalized, assets are carried above their real economic value.
  • Finding China in the U.S.TIC Data — China's holdings of U.S. assets began disappearing from U.S. custodial data after the G-7 immobilized Russia's reserves, and estimating them has grown harder as China diversified away from both U.S. and Belgium-based custodians. Estimates suggest a lower share in long-term Treasuries, more bills, and roughly 10% in agency bonds.

AI Summary. Unionized workers across New York City have won substantial pay increases, including a hotel housekeeper contract reaching six-figure salaries and commuter train workers who already averaged over $135,000 a year. Apartment-building workers are reviewing a tentative deal raising hourly wages $4.50 and guaranteeing a 15% pension increase.

Rachel Louise Ensign, Kate King and Justin Lahart Wall Street Journal
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NYC hotel housekeepers’ new 8-yr contract: hourly wage rises from $39.87 to $61.07, crossing $100,000/yr by year six. Striking LIRR workers, already averaging over $135,000, also won raises this week. Nurses and doormen notched similar gains this year.

Are city unions winning six-figure pay in new contracts?

Core argument: New York City hotel housekeepers won a contract that puts them on track to earn six-figure salaries in coming years.

New York City’s unionized workers are getting big raises. Hotel housekeepers won a contract this week that will have them earning six figures in coming years. Striking commuter train workers, who already earned over $135,000 on average, won pay increases this week too. Unionized apartment-building workers, including doormen, are currently reviewing a tentative agreement that would increase their hourly wages $4.50 an hour by 2030, according to the union representing them. If ratified, union members would also maintain free healthcare benefits and receive a 15% guaranteed pension increase, the union said. Employees would earn at least $71,000 in annual wages by the end of the four-year contract. Nurses at major city hospitals also held their largest and longest strike in city history earlier this year, securing salary increases of more than 12% over the course of the three-year contract.

Takeaways by Macro Roundup® AI

  1. New York City hotel housekeepers won a contract that puts them on track to earn six-figure salaries in coming years.
  2. Striking New York City commuter train workers, who already earned over $135,000 on average, won pay increases, while unionized apartment-building workers, including doormen, are reviewing a tentative deal raising hourly wages $4.50 by 2030.
  3. Nurses at major New York City hospitals held their largest and longest strike in city history, securing salary increases of more than 12% over a three-year contract.

Related Articles:

  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.
  • Minimum Wages and the Rise of the Robots — State-level measures of exposure to industrial robots show substantial geographic variation across the US, with the highest concentrations in the Southwest, Midwest, and Northwest and the lowest in the Mountain West, parts of the South, and northern regions. The authors find state robot exposure is positively correlated with state minimum wage increases.
  • Where Did All the American-Born Roofers Go? — The share of foreign-born workers in US construction is now nearly twice that of other industries, after being equal in the 1970s and 1980s, and 9 of 10 construction workers are nonunion. Unionized construction workers earn $1.15 for every $1 the average American worker earns hourly, down from $1.71, while nonunion construction workers earn 86 cents.

AI Summary. Patent data show the largest surge in space-related patenting occurred in the 1990s, alongside spectrum allocation, licensing regimes, and telecommunications and GPS demand, with incumbent aerospace firms accounting for most space patenting and entrants a growing minority share. The authors argue government's most consequential role lies in constructing appropriable markets rather than funding technology directly.

Ruben Gaetani and Alexander Whalley National Bureau of Economic Research
Date Posted:

The biggest post-1970s surge in space innovation came in the 1990s, when policy created commercial markets for satellites and communications. Incumbent firms, not “New Space” entrants, drove most of this boom and still account for most space patents.

What drove the surge in space innovation, market creation or funding?

Core argument: Patent data show the largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications.

This paper uses patent data to examine the timing and composition of space innovation, finding patterns that challenge the popular narrative attributing commercial space transformation to entrepreneurial entrants after 2005. The largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications. Throughout this period and since, incumbent aerospace firms have accounted for the majority of space-related patenting, with entrants contributing a growing but still minority share concentrated in broader space technologies rather than launch vehicles. These patterns are consistent with directed technical change: incumbents direct R&D toward policy-created markets accessible from existing capabilities, while entrants later bring science-based insights into domains requiring new technological paradigms. Government’s most consequential role in space innovation may lie in constructing appropriable markets rather than directly funding technological development or enabling entrepreneurial entry. Our findings reveal that the commercial space transformation is more closely connected to its government-led origins than narratives emphasizing entrepreneurial disruption suggest.

Takeaways by Macro Roundup® AI

  1. Patent data show the largest surge in space-related patenting occurred in the 1990s, coinciding with demand-side market creation through spectrum allocation, licensing regimes, and growing demand from telecommunications and GPS applications.
  2. Incumbent aerospace firms have accounted for the majority of space-related patenting throughout and since the 1990s, with entrants contributing a growing but still minority share concentrated in broader space technologies rather than launch vehicles.
  3. The authors argue that government's most consequential role in space innovation may lie in constructing appropriable markets rather than directly funding technological development or enabling entrepreneurial entry.

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  • Factories of Ideas? Big Business and the Golden Age of American Innovation — Using new data linking firms, patents, and inventors, the author estimates that America's great merger wave substantially increased innovation, raising breakthrough patents by 13% overall and 30% in science-based fields. Among firms already patenting, consolidation added about 6 patents and 0.6 breakthroughs per year, with corporate research laboratories identified as the key mechanism.
  • Mega Firms and New Technological Trajectories in the U.S. — The share of novel patents produced by the 50 largest US firms by sales followed a U-shaped path, falling from 1980 to the early 2000s before rising to its highest level by 2016. The authors find these firms' novel patents since 2001 generate more follow-on patents by other firms, suggesting knowledge diffusion.
  • Space: The Missing Element of Your Strategy — Private-sector funding of space-related companies has topped $10bn, close to a tenfold rise over the past decade, though the US government remains the largest source of space funding. If current momentum continues, commercial funding for space ventures could surpass government funding within 20 years.

AI Summary. The yield on 30-year US Treasury bonds reached 5.19%, its first time at that level since 2007. The author argues that the suddenness of such a move in yields, rather than the level itself, could dislodge the financing that underpins stocks and pressure credit markets.

John Authers Bloomberg
Date Posted:

Authers notes that the 30-year Treasury yield just hit a 19-year high, last seen in June 2007. He recalls that a column he co-wrote that month warned cheap money was ending. Weeks later, Bear Stearns’ hedge funds collapsed and the GFC spiral began.

Does the speed of rising bond yields threaten stocks and credit markets?

Core argument: The yield on 30-year Treasury bonds rose Tuesday to 5.19%, its first time at that level since June 2007.

The yield on 30-year Treasury bonds rose Tuesday to 5.19% for the first time since June 2007 (at . A similar headline appeared on a piece I wrote with my colleague Michael Mackenzie about that 2007 landmark for the Financial Times, our employer at the time, and it makes uncomfortably relevant reading today. The concern was that rates at these levels might burst higher, bringing down the then-booming stock market and putting unbearable pressure on credit markets. As I argued: "Money just seems too cheap. Bond yields are not high by historical standards, but the suddenness of their move might dislodge the financing that underpins stocks. If that scenario turns out to be true — and it is still too early to say that it will — the bond selloff might presage the end of an era for stocks." I hedged by saying that it was too early to tell, but that bond selloff did indeed signal the end of an era for equities. Within weeks, subprime credit was selling, two Bear Stearns hedge funds collapsed, and the long spiral into what we now call the Global Financial Crisis had begun.

Takeaways by Macro Roundup® AI

  1. The yield on 30-year Treasury bonds rose Tuesday to 5.19%, its first time at that level since June 2007.
  2. A 2007 Financial Times piece argued that money seemed too cheap and that the suddenness of the move in bond yields might dislodge the financing underpinning stocks, possibly presaging the end of an era for equities.
  3. Within weeks of the 2007 bond selloff, subprime credit was selling, two Bear Stearns hedge funds collapsed, and the spiral into the Global Financial Crisis had begun.

Related Articles:

  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.

AI Summary. For three decades after commercial electricity delivery began in 1882, inflation-adjusted output per worker grew just 0.5% annually, accelerating to more than double that pace only after factories were redesigned around electric motors rather than retrofitted from steam. The author argues a near-term absence of productivity acceleration from AI is not evidence none is coming.

Ernie Tedeschi Stripe Economics
Date Posted:
Is Database:
Database

Tedeschi points to a split in new US business formation: overall applications are rising, but filings from firms likely to hire employees have stalled. He argues AI may be fueling “solopreneur” activity by making it easier to launch without staff.

Does slow early productivity growth mean a new technology won't deliver?

Core argument: For the three decades after Edison began delivering commercial electricity in New York in 1882, inflation-adjusted output per worker grew just 0.5% annually, a sluggish pace relative to what electricity would eventually enable.

For three decades after Thomas Edison began delivering commercial electricity to New York customers in 1882, inflation-adjusted output per worker grew at just 0.5% annually—a sluggish pace relative to what electricity would eventually enable. The gains became evident only as the economy's capital stock and organizational practices adapted to the new technology: new factories designed around electric motors from the ground up, rather than retrofitted from steam. Some of the impetus for this replatforming came from the weapons production spurred by World War I. In the decade after 1917, productivity growth more than doubled its prior three-decade average. The implication for AI is that a near-term absence of productivity acceleration in the aggregate data should not be read as evidence that no acceleration is coming.

Takeaways by Macro Roundup® AI

  1. For the three decades after Edison began delivering commercial electricity in New York in 1882, inflation-adjusted output per worker grew just 0.5% annually, a sluggish pace relative to what electricity would eventually enable.
  2. Productivity gains from electricity emerged only as the economy's capital stock and organizational practices adapted, with new factories designed around electric motors from the ground up rather than retrofitted from steam.
  3. In the decade after 1917, productivity growth more than doubled its prior three-decade average, with some impetus for that replatforming coming from World War I weapons production.

Related Articles:

  • Sectors Embracing AI Are Seeing a Surge in New Business Formation — Sectors with the highest artificial intelligence adoption rates have also seen the strongest growth in new business applications, which one analysis interprets as evidence that AI is lowering the barriers to starting a company.
  • Attention (And Money) Is All You Need: Why Universities Are Struggling to Keep AI Talent — The annual compensation gap between top industry and academic artificial intelligence researchers widened from roughly $294,000 to $1.5m, coinciding with accelerating academic out-migration toward large incumbent technology firms. Researchers who move to industry cut paper production by about 63% while increasing patent filings nearly sixfold, consistent with a shift from open science toward proprietary innovation.
  • Which Entrepreneurs Boost Productivity? — The authors find that a minority of entrepreneurs are "transformative" — generating disproportionate productivity gains, scoring high on IQ tests, being well-educated, and hiring research and development workers. They argue that economies with more such entrepreneurs and R&D workers sustain higher long-run productivity growth.