Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, September 14, 2026

AI Summary. The 10-year US Treasury yield reached 5% for the first time since 2023, as rising oil prices weighed on government bonds globally. The yield serves as a benchmark for trillions of dollars in assets worldwide, and aside from a brief move to 5% in 2023, it last held above that level before the 2008 financial crisis.

Emily Herbert, Ian Smith and Kate Duguid Financial Times
Date Posted:

The US 10-year Treasury yield broke 5% for the first time since 2023 rising to 5.01% before falling back to ~4.95%.

Are rising oil prices pushing government bond yields higher worldwide?

Core argument: The 10-year US Treasury yield reached 5% for the first time since 2023, rising 0.04 percentage points to 5.01% in morning Wall Street trading before easing to about 4.95%.

The 10-year US Treasury yield hit 5% on Monday for the first time since 2023, as surging oil prices battered government bonds across the world and pushed the world’s most important financial gauge into dangerous territory. The yield was up 0.04 percentage points at 5.01% in morning trading on Wall Street [before falling to ~4.95%] America’s 10-year yield acts as a benchmark for trillions of dollars in assets worldwide and its jump to 5% is widely viewed as a worrisome threshold. Besides a brief rise to 5% in 2023, the last time 10-year borrowing costs hovered above that level was in the lead-up to the 2008 financial crisis.

Takeaways by Macro Roundup® AI

  1. The 10-year US Treasury yield reached 5% for the first time since 2023, rising 0.04 percentage points to 5.01% in morning Wall Street trading before easing to about 4.95%.
  2. Surging oil prices battered government bonds worldwide, pushing the US 10-year yield — a benchmark for trillions of dollars in assets globally — to a level widely viewed as a worrisome threshold.
  3. Apart from a brief rise to 5% in 2023, US 10-year borrowing costs last hovered above that level in the lead-up to the 2008 financial crisis.

Related Articles:

  • Don’t Draw The Wrong Conclusion From Treasury Yields — Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.
  • US Yields at Multiyear Highs Attract Buyers to 30-Year Auction — Yields on US government debt rose 5 to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The higher yields drew strong demand at a $22bn auction of 30-year bonds, awarded at 5.308% — 2.7 basis points below pre-auction market levels — with a record-low 2.2% going to Wall Street dealers.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.

AI Summary. The authors estimate the natural inflation-adjusted rate on 10-year US Treasuries fell from about 5% in the early 1980s to roughly 1.6% in 2010-2015 and is now rising, reaching almost 2.6%. That implies a 10-year Treasury yield consistent with stable inflation of about 4.7%.

Jamie Rush, Martin Ademmer, and Tom Orlik Bloomberg
Date Posted:

Bloomberg estimates that the real natural rate on 10-year Treasuries rose to ~2.6% in Q2 2026, ~100bp above its 2010–15 trough. That implies a “10-year Treasury yield consistent with stable inflation of around 4.7%,” close to the current market yield of ~5%.

Is the natural rate on long-term Treasuries rising again?

Core argument: The authors estimate the real natural rate on 10-year Treasuries at almost 2.6% in the second quarter of 2026, up from a trough of about 1.6% between 2010 and 2015.

For more than three decades, from the early 1980s to the mid-2010s, the natural rate on 10-year Treasuries was falling. Our estimates show it dropped from an inflation-adjusted peak of around 5% in the early 1980s to a trough of about 1.6% between 2010 and 2015. Now it is rising. Our latest calculations, inspired by a framework developed by economists at the Federal Reserve Bank of New York, put the real natural rate at almost 2.6% in the second quarter of 2026. In nominal terms, that translates to a 10-year Treasury yield consistent with stable inflation of around 4.7%.

Takeaways by Macro Roundup® AI

  1. The authors estimate the real natural rate on 10-year Treasuries at almost 2.6% in the second quarter of 2026, up from a trough of about 1.6% between 2010 and 2015.
  2. The authors’ estimates show the inflation-adjusted natural rate on 10-year Treasuries fell from a peak near 5% in the early 1980s to its mid-2010s trough, a decline of more than three decades that has now reversed.
  3. A real natural rate of about 2.6% translates into a nominal 10-year Treasury yield consistent with stable inflation of around 4.7%, according to the authors’ calculations, which draw on a framework developed by Federal Reserve Bank of New York economists.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.
  • The Coming Great Repression? — Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.

AI Summary. An estimate of the intrinsic 10-year US Treasury rate, built from actual inflation and real economic growth, far exceeded the actual 10-year Treasury rate after inflation surged, and that gap has since narrowed to roughly 4.75% actual versus 5.41% intrinsic.

Aswath Damodaran Musing on Markets
Date Posted:
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Database

Damodaran’s “intrinsic” 10-year Treasury rate—calculated as US real GDP growth plus inflation—has broadly tracked the nominal 10-year Treasury yield since 1962. As of early September 2026, the 10-year yield of ~5% was 41bp below his 5.41% intrinsic-rate estimate.

Do long-term Treasury rates line up with inflation and growth fundamentals?

Core argument: As of September 2026, the US 10-year Treasury rate stood at 4.75% while the intrinsic 10-year rate was 5.41%, a gap of 66 basis points.

[The graph shows] the actual inflation rates and real GDP growth rates for the US, going back to 1962, and [the implied] intrinsic 10-year treasury rate (the cumulative column) and actual 10-year treasury rate each year. When inflation surged in 2022, interest rates went up, but since the rates that I am tracking are long term rates, the intrinsic risk free rate vastly exceeded the actual rate that year, but the difference has narrowed over time, and almost dissipated by September 2026 (when the US 10-year treasury bond rate was [5%] and and the intrinsic ten-year rates yielded 5.41%).

Takeaways by Macro Roundup® AI

  1. As of September 2026, the US 10-year Treasury rate stood at 4.75% while the intrinsic 10-year rate was 5.41%, a gap of 66 basis points.
  2. When inflation surged in 2022, the intrinsic risk-free rate vastly exceeded the actual 10-year Treasury rate, and that difference has narrowed since.
  3. The intrinsic 10-year Treasury rate is built from actual US inflation and real GDP growth rates going back to 1962 and compared against the actual 10-year Treasury rate each year.

Related Articles:

  • 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.
  • US 30-Year Bonds Erase Gains From Treasury’s Buyback Surprise — US Treasuries erased nearly all gains that followed the Treasury Department's surprise decision to increase buybacks of longer-dated bonds, with the 30-year yield rising above 5.27% and the 10-year touching 4.71%. The reversal signals the move has done little to ease concern about surging government debt.
  • Annual Economic Report — Public debt in advanced economies has risen steadily, limiting governments' ability to cushion higher energy prices. Cyclically adjusted primary deficits averaged 1.9% of GDP in advanced economies since 2022 versus 1.1% over the two preceding decades, and 1.8% in emerging markets versus 0.1% from 2000–2019.

AI Summary. The 10-year US Treasury yield has reached a three-year high, and the global rise in yields poses the greatest risk in countries where investors doubt debt sustainability, most notably France. The gap between French and German 10-year government bond yields is near 1%, and French debt financing costs are their highest since 2008 amid a divided legislature.

John Authers Bloomberg
Date Posted:

Authers warns that “if Bessent doesn’t tame the Treasury market, the worst effects may well be felt in France.” The spread between French 10-year OATs and equivalent German Bunds is close to 1pp—higher than during other episodes of French political upheaval over the past decade.

Where do rising global bond yields pose the greatest risk?

Core argument: The 10-year yield ended last week at a three-year high, close to returning to levels last seen in 2007, a threshold whose breach could prove crucial.

The global shift in yields could have its greatest impact in other jurisdictions where investors worry that government debt is out of control. The most worrying example is France. French politics has been logjammed for two years, since snap elections left the legislature roughly equally divided between three political blocs. That gridlock won’t end before next spring’s presidential election, which might well at last give Marine Le Pen’s Rassemblement National a turn in power. The issue is whether the fiscal concerns boil over into a market crisis before or after the election. The spread of French 10-year OATS over equivalent German bunds is close to 1%, higher than during other political upheavals of the last 10 years. In absolute terms, the cost of financing French government debt is its highest since the crisis of 2008.

Takeaways by Macro Roundup® AI

  1. The 10-year yield ended last week at a three-year high, close to returning to levels last seen in 2007, a threshold whose breach could prove crucial.
  2. The spread of French 10-year OATs over equivalent German bunds stands close to 1%, higher than during other political upheavals of the last 10 years, while the absolute cost of financing French government debt is its highest since the 2008 crisis.
  3. French politics has been logjammed for two years since snap elections split the legislature roughly evenly among three blocs, gridlock unlikely to end before next spring’s presidential election, which might give Marine Le Pen’s Rassemblement National a turn in power.

Related Articles:

  • 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 Global Debt Shock — Global bond yields are rising and markets are differentiating between high- and low-debt countries, with the smallest cumulative yield increases relative to the global average in Switzerland, Norway, Sweden, New Zealand and Australia. The author argues this price action shows investors are agitated about deficits and debt.
  • Annual Economic Report — Public debt in advanced economies has risen steadily, limiting governments' ability to cushion higher energy prices. Cyclically adjusted primary deficits averaged 1.9% of GDP in advanced economies since 2022 versus 1.1% over the two preceding decades, and 1.8% in emerging markets versus 0.1% from 2000–2019.

AI Summary. The refining margin for diesel averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom. Because the diesel market is roughly 29.5m barrels a day versus under 8m for jet fuel, far larger shifts in refinery output are needed to move diesel supply or prices.

Javier Blas Bloomberg
Date Posted:

Given the reduction in Chinese oil imports and the ongoing wars, increasing diesel supply will be difficult. Blas argues that higher diesel prices will kill some demand and rebalance the market.

Why is diesel supply harder to rebalance than jet fuel?

Core argument: The crack spread averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom driven by surging Chinese oil demand.

From 1985 to 2021, the crack spread averaged about $10.50. Even between 2004 and 2008 — the so-called golden age of refining, when Chinese oil demand exploded — it never surpassed $30. As refining has become ever more lucrative in recent months, every plant outside Russia, the Middle East and China is running as fast as it can. Unfortunately, the large size of the diesel market, at about 29.5 million barrels a day, means significant shifts in refinery output would be needed to move the dial on either supply or prices. To put this into perspective, jet fuel has a daily volume of less than 8 million barrels, so relatively small changes in refining output and airline consumption were able shift the supply and demand balance more easily. Ultimately, higher diesel prices should push demand lower, rebalancing the market — but that carries an economic cost, particularly for those countries that are more reliant on the fuel.

Takeaways by Macro Roundup® AI

  1. The crack spread averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom driven by surging Chinese oil demand.
  2. The diesel market’s size of about 29.5 million barrels a day means significant shifts in refinery output would be needed to move either supply or prices, while every plant outside Russia, the Middle East and China runs as fast as it can.
  3. Jet fuel’s daily volume of less than 8 million barrels allowed relatively small changes in refining output and airline consumption to shift the supply and demand balance more easily than in diesel.

Related Articles:

  • US Diesel Hits Record $6 A Gallon On Iran Supply Shock — US diesel pump prices reached a record $6.06 a gallon, above the prior high of $5.82, according to motorist group AAA. Diesel's role in the transport supply chain is feeding into rising producer prices, and grain farmers report that higher fuel and fertiliser costs are eating into profits.
  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — The United States became a net oil exporter in late 2019, and oil and oil product spending fell from near 8% of GDP in 1980 to 3% in 2024. The authors estimate a 15% global oil supply disruption would now cut annualized U.S. real GDP growth by 0.3pp, versus 1.7pp in the rest of the world.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. The European earth observation service reported an August global average surface air temperature of just under 62.6°F, 2.97°F above the pre-industrial baseline and on a par with the prior record, with global sea temperature at 69.93°F. Provisional US data recorded 100 consecutive days of record ocean warming.

Attracta Mooney and Aditi Bhandari Financial Times
Date Posted:

Global mean sea-surface temperature reached 69.9°F in August, amid 100 consecutive days of record ocean warming since early June, according to provisional NOAA data. The increase in temperature has been amplified by the El Niño cycle.

Are global air and ocean temperatures setting new records?

Core argument: The European earth observation service put August’s global average surface air temperature at 2.97°F above the pre-industrial baseline, just under 62.6°F, on a par with the previous record set in July 2023.

The European earth observation service said the global average surface air temperature in August was 2.97°F higher than the pre-industrial baseline, reaching just under 62.6°F. This put it on a par with the previous record set in July 2023. The global sea temperature in August was put at 69.93°F. This week marked 100 consecutive days of record warming since early June, according to provisional data from the US National Oceanic and Atmospheric Administration. This stretch was exceeded during the previous El Niño cycle. It is estimated that El Niño typically affects the global mean temperature by about 0.36°F, although the magnitude was likely to be larger this year because of the extent of the naturally occurring event.

Takeaways by Macro Roundup® AI

  1. The European earth observation service put August’s global average surface air temperature at 2.97°F above the pre-industrial baseline, just under 62.6°F, on a par with the previous record set in July 2023.
  2. Global sea temperature in August was put at 69.93°F, and provisional NOAA data show 100 consecutive days of record warming since early June, a stretch exceeded during the previous El Niño cycle.
  3. El Niño is estimated to affect the global mean temperature by about 0.36°F, though the magnitude was likely to be larger this year given the extent of the naturally occurring event.

Related Articles:

  • Warming Seas Are Brewing Extreme Weather In Months Ahead, Scientists Forecast — Global sea temperatures reached their second highest level on record for the month of April, with the European Union's Copernicus Climate Change Service reporting record sea-surface temperatures across much of the tropical Pacific. Scientists say this raises concerns that an El Niño warming cycle is forming, which would temporarily accelerate global air temperature rise and intensify fires, floods and droughts.
  • The Dangerous Effects Of Rising Sea Temperatures — The world's oceans have absorbed 90% of excess heat and about a quarter of human-caused carbon dioxide emissions during the industrial era, and scientists are investigating what drove an anomalous rise in sea temperatures and whether seas will cool again. Researchers caution there is no guarantee oceans will keep absorbing heat at the same rate.
  • Three Tough Truths About Climate — The International Energy Agency's projection for annual carbon dioxide emissions in 2040 has fallen from 50bn tons to 30bn tons, though the world is expected to fall far short of the 1.5°C Paris goal, with warming likely between 2°C and 3°C by 2100. Global energy demand is projected to more than double by 2050.

Tuesday, September 15, 2026

AI Summary. About 52% of consumer price index components are rising at least 3% year-over-year, down from 73% at the peak but above the 32% average from 2000 to 2020, and such breadth measures track actual inflation closely. Weighting components by spending shares makes the current episode resemble milder past inflation accelerations rather than the largest ones.

Matt Klein The Overshoot
Date Posted:

Matt Klein examines “breadth measures,” such as the share of PCE components with prices rising at least 3% y/y, which have tracked actual inflation well since 1960. 52% of components were rising at least 3% y/y as of July 2026 vs. the 2000–2020 mean of 32%.

Does the breadth of price increases show inflation has returned to normal?

Core argument: 52% of price index components were rising at least 3% y/y as of July 2026, down from 73% at the peak but above the 2000–2020 average share of 32%.

Breadth measures seem to track actual inflation pretty well, both overall and within narrower aggregates such as supercore services. The picture looks a bit better when components are weighted by their shares of total spending. Over the past few years, the weighted share of components with price increases of at least 3% has been higher than the unweighted share, while the spending-weighted share of components with price increases of at least 4% (much less 5%) has been lower than the unweighted share. That makes the current situation look more like the inflation accelerations of 1968-1971, 1987-1989, 1999-2001, and 2006-2008, rather than 1973, 1979, or 2022.

Takeaways by Macro Roundup® AI

  1. 52% of price index components were rising at least 3% y/y as of July 2026, down from 73% at the peak but above the 2000–2020 average share of 32%.
  2. Breadth measures appear to track actual inflation fairly well, both for the overall index and for narrower aggregates such as supercore services.
  3. Weighting components by spending shares raises the share with price increases of at least 3% but lowers the share at 4% or 5%, making current conditions look more like the accelerations of 1968–1971, 1987–1989, 1999–2001, and 2006–2008 than 1973, 1979, or 2022.

Related Articles:

  • Global Views: They’re Not Hiking — Estimated underlying trend job growth slowed to about 5k, below the estimated 50k breakeven pace, so similar readings would likely reverse part of the unemployment rate's decline from 4.5% to 4.1%. The authors argue that decline reflects lower labor force participation rather than higher employment, with wage growth still weak.
  • US Diesel Hits Record $6 A Gallon On Iran Supply Shock — US diesel pump prices reached a record $6.06 a gallon, above the prior high of $5.82, according to motorist group AAA. Diesel's role in the transport supply chain is feeding into rising producer prices, and grain farmers report that higher fuel and fertiliser costs are eating into profits.
  • Firm Inflation Reading Pushes Fed Closer to a Rate Increase — A firm inflation reading raised the odds implied by interest-rate futures of a quarter-point Federal Reserve rate increase to about 85% from roughly 70%. The central bank has been divided, with three officials dissenting in favor of raising rates and oil prices climbing above $99 a barrel from $85.76.

AI Summary. The 10-year US Treasury yield rose to about 5.02%, its highest level since 2007, extending a global bond selloff that has been driven by surging energy prices, mounting debt and inflation.

Greg Ritchie, Cameron Fozi, and Matthew Burgess Bloomberg
Date Posted:

The US 10-year Treasury yield breached the 5% threshold for the second day, rising to 5.04% – its highest level since 2007 – before falling back to 5%.

Are long-term Treasury yields at their highest in nearly two decades?

Core argument: The US 10-year Treasury yield rose as much as four basis points to 5.02% on Tuesday, surpassing its 2023 peak to reach the highest level since 2007.

The 10-year US Treasury yield rose to the highest level in almost two decades, the latest milestone in a bruising global bond selloff driven by surging energy prices, mounting debt and inflation. The yield rose as much as four basis points to 5.02% on Tuesday, surpassing a peak from 2023 to hit the highest since 2007.

Takeaways by Macro Roundup® AI

  1. The US 10-year Treasury yield rose as much as four basis points to 5.02% on Tuesday, surpassing its 2023 peak to reach the highest level since 2007.
  2. The global bond selloff behind the 10-year yield’s move has been driven by surging energy prices, mounting debt and inflation.

Related Articles:

  • Don’t Draw The Wrong Conclusion From Treasury Yields — Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.
  • US Yields at Multiyear Highs Attract Buyers to 30-Year Auction — Yields on US government debt rose 5 to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The higher yields drew strong demand at a $22bn auction of 30-year bonds, awarded at 5.308% — 2.7 basis points below pre-auction market levels — with a record-low 2.2% going to Wall Street dealers.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.

AI Summary. International flows into US stocks averaged 2.8% of US GDP over a year, overtaking flows into US Treasuries at 2% of GDP for the first time this century outside brief episodes during the Covid-19 pandemic and after the global financial crisis, according to Deutsche Bank analysis of US Treasury data.

Emily Herbert and Ian Smith Financial Times
Date Posted:
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International net flows into US equities reached 2.8% of GDP in the year through June, exceeding net inflows into Treasuries of 2% of GDP. Outside brief episodes during the pandemic and the aftermath of the GFC, this is the first time this century that equity inflows have surpassed Treasury inflows.

Are foreign investors now buying more US stocks than Treasuries?

Core argument: Foreign inflows into US stocks averaged 2.8% of US GDP in the year to June, overtaking Treasuries at 2% of GDP, according to Deutsche Bank analysis of US Treasury data.

International flows into US stocks reached 2.8% of US GDP on average in the year to June, overtaking Treasuries — at 2% of GDP — for the first time this century outside brief episodes in the Covid-19 pandemic and the aftermath of the global financial crisis, according to analysis of US Treasury data by Deutsche Bank. The change reflects the ever-growing lure of the US stock market, with the S&P 500 on track for a fourth straight year of double-digit gains. Powering the rally has been vast AI investment, which is driving profit margins to new highs, according to FactSet data stretching back to 2009.

Takeaways by Macro Roundup® AI

  1. Foreign inflows into US stocks averaged 2.8% of US GDP in the year to June, overtaking Treasuries at 2% of GDP, according to Deutsche Bank analysis of US Treasury data.
  2. Deutsche Bank’s analysis marks the first time this century that foreign equity flows have exceeded Treasury flows, outside brief episodes during the Covid-19 pandemic and the aftermath of the global financial crisis.
  3. The S&P 500 is on track for a fourth straight year of double-digit gains, powered by vast AI investment that is driving profit margins to new highs, according to FactSet data stretching back to 2009.

Related Articles:

  • World’s Unusually High Dollar Exposure Risks Fueling Selloff — Pension funds and insurers in Canada, Denmark, Australia, Taiwan, Japan and Finland hedged just 41% of their foreign-currency exposure, the lowest share since at least 2015. With some of the largest holders of US assets carrying little protection against a weaker dollar, the currency is at risk of steeper declines if sentiment turns.
  • 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.
  • The Global Balance Sheet 2026: Imbalance And Divergence — Only 20% of global household wealth growth came from net new investment in real assets such as machinery, housing, infrastructure and intellectual property, down from a 30% average over the prior quarter century. Nearly 60% came from asset prices rising faster than inflation and negative net worth in other sectors.

AI Summary. College graduates in the majors most exposed to artificial intelligence show statistically significant employment declines following the arrival of AI chatbots, with the most-exposed 10% of majors down about 5 percentage points and the seventh and eighth deciles down about 2 points. The authors note flat pre-2020 trends and precise timing argue against alternative explanations such as uneven post-pandemic recovery.

Cody Orr, Lee Tucker and Lawrence Warren U.S. Census Bureau
Date Posted:

A Census Bureau analysis of 29% of recent US college grads ranked majors by AI exposure using pre-ChatGPT occupational patterns. After ChatGPT’s November 2022 release, employment fell across the top 4 exposure deciles, with the top decile down 5pp compared to the bottom 6 deciles.

Are graduates in AI-exposed majors seeing employment declines?

Core argument: Employment for graduates in the most AI-exposed decile of college majors declined by an average of five percentage points relative to 2022 after ChatGPT’s release, with statistically significant declines of about two percentage points for deciles seven and eight.

In the quarters prior to 2020, the event study coefficients are usually statistically indistinguishable from zero across all deciles. Post-ChatGPT, there is a small to moderate decline in employment relative to the control group across the top four deciles with a particularly large effect for the tenth decile. For deciles seven, eight, and especially ten, these are statistically significant declines: an average of two percentage points for deciles seven and eight and five percentage points for decile ten relative to 2022. Decile nine also shows evidence of statistically significant declines, but this might reflect reversion to long-run trends rather than a negative effect of AI. Employment effects are clearly most acute among the most-exposed decile of majors. The relatively fat pre-trends and precise timing help to rule out some alternative explanations, such as heterogeneity in the post-pandemic recovery or the effects of a tight labor market in the reference period.

Takeaways by Macro Roundup® AI

  1. Employment for graduates in the most AI-exposed decile of college majors declined by an average of five percentage points relative to 2022 after ChatGPT’s release, with statistically significant declines of about two percentage points for deciles seven and eight.
  2. Event study coefficients were usually statistically indistinguishable from zero across all exposure deciles in the quarters before 2020, with small to moderate employment declines concentrated in the top four deciles afterward.
  3. Flat pre-trends and the precise timing of the employment declines help rule out some alternative explanations, such as heterogeneity in the post-pandemic recovery or a tight labor market in the reference period, while decile nine’s decline may reflect reversion to long-run trends.

Related Articles:

  • Looking for the Ladder — The article argues that the hiring downturn in occupations most exposed to generative AI reflects interest-rate sensitivity rather than AI itself, since roughly 38% of workers in the most AI-exposed quintile work in information, finance and insurance, and professional and technical services, versus under 2% in the least-exposed quintile.
  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — Employment for workers aged 22–25 in the occupations most exposed to artificial intelligence has declined roughly 18pp relative to less-exposed peers, with no comparable decline in other age groups. The authors find this operates mainly through reduced hiring, concentrated where AI substitutes for human tasks rather than complements them.
  • The College Wage Premium in the Generative AI Era — The U.S. college wage premium fell from 0.626 to 0.575 after four decades of expansion, implying the first sustained negative growth in relative demand for college-educated labor. The authors estimate that weaker wage growth in occupations highly exposed to artificial intelligence accounts for roughly 28% of that decline, though the patterns are not causal.

AI Summary. China has imposed new legal controls on overseas travel that formalise restrictions on mid-to-senior civil servants, Communist Party cadres, state-owned enterprise employees, and private citizens working in sensitive areas, as part of efforts to protect state secrets, advanced technology, and highly skilled workers. Violators face steep fines and exit bans ranging from three months to indefinite.

Joe Leahy, Sun Yu and Arjun Neil Alim Financial Times
Date Posted:

New Chinese restrictions on foreign travel will limit overseas trips for mid-to-senior-level civil servants, Communist Party cadres, and state-owned enterprise employees, as well as individuals working in areas deemed sensitive.

Is China restricting citizens' overseas travel to protect secrets and talent?

Core argument: China’s new overseas travel law imposes exit bans ranging from three months to an indefinite period plus steep fines on violators, as Xi Jinping steps up efforts to secure state secrets, advanced technology and highly skilled workers.

China has implemented sweeping new controls on overseas travel for Chinese citizens as President Xi Jinping steps up efforts to secure state secrets, advanced technology and highly skilled workers. The regulations formalise creeping restrictions on overseas trips for mid-to-senior-level civil servants, Communist Party cadres and state-owned enterprise employees. It will also cover private citizens working in sensitive areas. Those who breach the new rules will face steep fines and exit bans ranging from three months to an indefinite period. The law takes China back towards the decades-long prohibition on foreign travel that prevailed during the Mao era.

Takeaways by Macro Roundup® AI

  1. China’s new overseas travel law imposes exit bans ranging from three months to an indefinite period plus steep fines on violators, as Xi Jinping steps up efforts to secure state secrets, advanced technology and highly skilled workers.
  2. The regulations formalise creeping restrictions on foreign trips for mid-to-senior-level civil servants, Communist Party cadres and state-owned enterprise employees, and extend to private citizens working in sensitive areas, according to analysts and immigration experts.
  3. Henry Gao, a law professor at Singapore Management University, said the result could be a gradual shift back towards a pre-1990s model in which international travel is treated less as an individual right than as a privilege subject to administrative approval.

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