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 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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “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


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
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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
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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
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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.

Related Articles:

  • The Future, Made In China — China's economy runs on parallel tracks: a property crash, a booming high-tech manufacturing sector, and university graduates trained for traditional white-collar jobs entering a labor market geared toward advanced manufacturing. Researchers at Stanford and Harvard found a swing from optimism to pessimism, with about 28% of citizens expecting living standards to improve.
  • China Says Hostile Foreign Forces Are Driving Its Youth to Slack Off — China's Ministry of State Security attributes youth disillusionment to ideological infiltration by foreign anti-China hostile forces, calling young people the primary targets of such efforts. Millions of young Chinese have embraced a "lying flat" mindset, rejecting pressure to overwork or leaving work entirely in an economy with limited well-paying jobs.
  • No Passports, No Study Abroad: China Limits Public Employees’ Travel — China restricts public employees' foreign travel, including requirements to surrender passports, with rules extending under Xi Jinping to low-level workers such as teachers and nurses beyond the senior officials and state-secret handlers long required to report trips abroad. Some workers report being ordered to disclose personal social media accounts to employers.

Wednesday, September 16, 2026

AI Summary. Median U.S. household income rose 2.6% to $87,460, the highest level on record in data going back to 1967. Median income increased 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households, while changes for Asian and Hispanic households were not statistically significant.

Melissa Kollar and Zach Scherer U.S. Census Bureau
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Real US median household income increased 2.6% year over year in 2025 to a record high of $87,460.

Has median U.S. household income reached its highest level on record?

Core argument: Median U.S. household income reached $87,460 in 2025, up 2.6% from $85,210 in 2024 and the highest on record in data dating back to 1967.

In 2025, median household income was $87,460, an increase of 2.6% from the 2024 estimate of $85,210. Household income in 2025 was the highest on record dating back to 1967. For all demographic characteristics of the householder the median household income estimates in 2025 were either higher than the 2024 estimates or were not statistically different from 2024. Median household income increased by 3% for White households, 2.9% for non-Hispanic White households, and 4.8% for Black households. Median income did not change significantly for Asian or Hispanic households.

Takeaways by Macro Roundup® AI

  1. Median U.S. household income reached $87,460 in 2025, up 2.6% from $85,210 in 2024 and the highest on record in data dating back to 1967.
  2. Median household income rose 4.8% for Black households, 3% for White households, and 2.9% for non-Hispanic White households in 2025, while Asian and Hispanic households saw no statistically significant change.
  3. Across all demographic characteristics of the householder, 2025 median household income estimates were either higher than or not statistically different from 2024 estimates.

Related Articles:

  • Income in the United States: 2024 — U.S. median household income was $83,730, not statistically different from the prior year's $82,690, according to Census Bureau estimates. Across most demographic subgroups, median household income was higher or not statistically different from the prior year, with the exception of Black households, which saw a decline.
  • US Focus: The Effect Of Soaring Profits — US nominal pre-tax corporate profits in the national accounts grew 23% over the past year, a pace not seen outside post-recession spikes since the mid-2000s. Wider margins were the key driver, as domestic profit growth far exceeded the 8% rise in corporate value added, pushing margins near all-time highs while the labor share hit new lows.
  • 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. AI adoption has risen to 22.4%, with labor market effects visible but narrow: employment drags appear in marketing, graphic design, customer service, and some tech occupations, offset by 209k in added data center-exposed construction jobs. Corporate layoffs attributed to AI totaled 113k year-to-date, including 11k in a single month.

Sarah Dong and Joseph Briggs Goldman Sachs
Date Posted:

While finding a “slight positive correlation between AI adoption and unemployment among younger workers,” GS argues AI’s impact on the labor market remains “narrow.” The technology sector’s share of total employment continues to decline relative to its pre-2022 trend.

Is AI's labor market impact still narrow as adoption rises?

Core argument: AI adoption rose to 22.4%, with labor market effects remaining visible but narrow, concentrated in marketing, graphic design, customer service, and some tech occupations.

AI’s labor market impact remains visible but narrow. We continue to observe employment drags in specific industries where AI-use cases have been established such as marketing, graphic design, customer service, and some tech occupations. However, this is offset by construction job growth in data center-exposed categories, which is up 209k since 2022 (relative to broader construction employment trends). The tech share of total employment continues to decline relative to the pre-2022 trend. The correlation between AI adoption and broad labor market slack measures remains limited but has strengthened in recent months. Corporate layoffs attributed to AI affected 11k employees in June, bringing the 2026 YTD total to 113k.

Takeaways by Macro Roundup® AI

  1. AI adoption rose to 22.4%, with labor market effects remaining visible but narrow, concentrated in marketing, graphic design, customer service, and some tech occupations.
  2. Construction employment in data center-exposed categories is up 209k since 2022 relative to broader construction employment trends, offsetting employment drags in industries with established AI use cases.
  3. Corporate layoffs attributed to AI affected 11k employees in June, bringing the 2026 year-to-date total to 113k, while the correlation between AI adoption and broad labor market slack measures remains limited though it has strengthened in recent months.

Related Articles:

  • Graduating into Disruption: Labor Market Outcomes for AI-Exposed College Majors — 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.
  • 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.

AI Summary. The authors estimate the heritability of labor market outcomes by comparing the excess similarity of same-sex over opposite-sex twins with the corresponding difference among ordinary siblings. They caution that social interaction between twins, assortative mating, genetic dominance, population stratification, or indirect parental effects can bias such estimates upward or make them reflect non-genetic influences.

David Card, Jesse Rothstein and Moises Yi National Bureau of Economic Research
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Analysis of 44,500 twin pairs suggests ~one-third of the variation in log earnings is due to genetic differences – likely an upper bound, because same-sex twins may influence one another and share more similar environments than ordinary same-sex siblings.

How reliable are twin-based estimates of heritability in earnings?

Core argument: The authors identify heritability of U.S. labor market outcomes from a difference-in-differences comparing same-sex versus opposite-sex twins against the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical.

Our model identifies heritability from the difference-in-differences of same-sex vs. opposite-sex twins vs. siblings. [Specifically], the model attributes to genetic differences the excess similarity of same-sex over opposite-sex twins over and above the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical. The ordinary-sibling comparison is intended to remove family influences that differ between sons and daughters. Social interactions may lead to an over-estimate of the genetic component in earnings. The estimated heritability of outcomes may be biased in the presence of assortative mating, genetic dominance, population stratification, or violations of the assumption that the home environment is shared to the same degree for MZ as for DZ twins. Even when estimated without bias, heritability need not indicate direct genetic effects – it also may reflect indirect or cultural effects (e.g., effects of the parents’ genes on a child’s outcomes, not operating through the child’s own genes. Twins may [also] influence each other directly – for example in their choice of jobs -- inflating the correlation in their outcomes.

Takeaways by Macro Roundup® AI

  1. The authors identify heritability of U.S. labor market outcomes from a difference-in-differences comparing same-sex versus opposite-sex twins against the corresponding difference among ordinary siblings, adjusting for the estimated share of same-sex twins who are identical.
  2. Social interactions between twins, such as influencing each other’s job choices, may inflate the correlation in their outcomes and lead to an over-estimate of the genetic component in earnings.
  3. Estimated heritability may be biased by assortative mating, genetic dominance, population stratification, or unequal sharing of the home environment between identical and fraternal twins, and even unbiased estimates may reflect indirect or cultural effects such as parents’ genes.

Related Articles:

AI Summary. Much of the official-sector inflow into the U.S. now comes from investors who are not traditional reserve managers, and those flows remain heavily tilted toward the dollar and toward risk assets rather than Treasuries. The author argues this shift in the global investor base helps explain why Treasuries trade at a discount while the dollar retains a premium.

Brad Setser and Alex Etra Council on Foreign Relations
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The stock of global dollar reserves has been roughly stable over the past decade. The world is not moving away from the dollar: dollar assets are shifting from official holdings of Treasurys towards private and quasi-sovereign holdings of risk assets.

Why do Treasuries trade at a discount while the dollar keeps premium?

Core argument: Most official-sector inflows into the U.S. come from investors who are not classic reserve managers, and those flows remain heavily tilted toward the dollar, so any real de-dollarization would likely begin among these investors.

Most of the current flow into the US from the “official” sector is coming from investors who are not classic reserve managers. Those flows remain heavily tilted toward the dollar, at least for now. Any real de-dollarization would likely occur first among these investors. Put differently, the dollar’s global role is increasingly as a source of returns, not a source of safety. The foreign bid, private and public, is for risk, not for Treasuries. It is currently fashionable in some circles to point to the diminution of the “convenience yield” on Treasuries even while the U.S. dollar continues to enjoy such a privilege. But the shift in the global investor base and their apparent portfolio preference for U.S. risk assets in lieu of Treasuries may help explain the divergence between the convenience yield on Treasuries and the convenience yield on the USD.

Takeaways by Macro Roundup® AI

  1. Most official-sector inflows into the U.S. come from investors who are not classic reserve managers, and those flows remain heavily tilted toward the dollar, so any real de-dollarization would likely begin among these investors.
  2. The dollar’s global role is increasingly as a source of returns rather than safety, with the foreign bid, private and public, directed at risk assets rather than Treasuries.
  3. The shift in the global investor base toward U.S. risk assets in lieu of Treasuries may help explain the divergence between the convenience yield on Treasuries and that on the dollar, and suggests the “profit dollar” is likely trading at a historical premium.

Related Articles:

  • Financial Innovation and the International Monetary System — The dollar accounts for 59% of cross-border payments messaged through SWIFT, far ahead of the euro's 14%, and its share of foreign exchange turnover has risen gradually to about 90% of the 200% total since 2010. Official holdings of U.S. Treasuries have leveled off near $4tn while foreign private holdings rose from $1tn to over $5tn.
  • Foreign Investors Prefer US Stocks To Treasuries As Debt Worries Grow — 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.
  • 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.

AI Summary. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000 as domestic savings fell short of investment, with growing global trade volumes boosting foreign demand for Treasuries and holding down US borrowing costs. The author argues stagnating trade and narrowing deficits shrink that funding subsidy.

Jason Thomas Carlyle
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US cumulative foreign borrowing since 2000 has reached 118% of GDP, but the US has earned more on foreign assets than foreigners earned on US liabilities. Carlyle speculates that this “exorbitant privilege” could erode if globalization unwinds.

Does shrinking global trade raise US borrowing costs?

Core argument: Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.

The size of the implicit US borrowing subsidy rose with global trade volumes. The growth in trade during the period of “globalization” was driven by the rise of globally-interconnected production networks, with production processes sliced into stages and distributed across borders. Businesses at each stage of the process would both invoice and get invoiced in dollars. This [plausibly] boosted demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems, which placed downward pressure on Treasury yields and cheapened broader dollar funding costs.

Takeaways by Macro Roundup® AI

  1. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.
  2. The implicit US borrowing subsidy grew with global trade volumes, as foreign demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems pressed Treasury yields down and cheapened broader dollar funding costs.
  3. Policies that scale back US external commitments, narrow the goods trade deficit, and restrict foreign adversaries’ access to dollar clearing further reduce the foreign savings available and willing to be recycled into low-yielding US assets.

Related Articles:

  • Global Trade Imbalances: Actual Problems, Unlikely Solutions — Foreign capital flowing into the US is shifting from government purchases of US Treasury bonds toward private foreign investment in US stocks and other riskier assets. This means a share of future gains from US productivity-enhancing investment will flow to these foreign investors, who are likely more willing to sell and exit if returns worsen.
  • Honey, Who Shrunk the U.S. Income Surplus? — 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.
  • https://www.edwardconard.com/2025/04/01/without-spending-cuts-brace-for-slow-growth/ — My Wall Street Journal Op-Ed: Without Spending Cuts, Brace for Slow Growth

AI Summary. A peer-reviewed analysis of a conceptual General Fusion plant design found that, because the plant consumes energy itself, only about 40% of its electricity would be available for sale, requiring it to generate more than twice as much power as a conventional thermal plant to deliver the same amount to the grid.

Ryohtaroh Satoh Financial Times
Date Posted:

Steven Cowley, director of the Princeton Plasma Physics Laboratory, says he is “confident” that a fusion plant will be built by the end of the 2030s, but cautions it will be a “technology experiment,” not a commercial project.

How much of a fusion plant's electricity is available for sale?

Core argument: Adam Jackson’s peer-reviewed paper on General Fusion’s 2023 conceptual plant design found only about 40% of the electricity generated would be available for sale to the grid, with the rest consumed by the plant itself.

Adam Jackson, a former systems engineer at General Fusion, thinks fusion companies are unrealistic about electricity pricing. In a peer-reviewed paper published after he left, Jackson analysed a conceptual plant design by General Fusion from 2023. Because the plant itself was consuming energy, only about 40% of the electricity would be available for sale to the grid. General Fusion estimates that the cost of building and operating a fusion plant over its lifetime will be $64-$73 per MWh of electricity it produces. Commonwealth Fusion Systems, the industry’s biggest player backed by Google, has a target of about $50/MWh for its commercial plant, while stressing that the figure is a guideline. In the US, electricity from a new nuclear power plant costs about $71/MWh, while solar from a farm, rather than rooftops, may cost about $38/MWh.

Takeaways by Macro Roundup® AI

  1. Adam Jackson’s peer-reviewed paper on General Fusion’s 2023 conceptual plant design found only about 40% of the electricity generated would be available for sale to the grid, with the rest consumed by the plant itself.
  2. Jackson’s paper found that a fusion plant would need to generate more than twice as much electricity as a conventional thermal power plant to deliver the same amount to the grid.
  3. General Fusion estimates lifetime build and operating costs of $64–$73/MWh and Commonwealth Fusion Systems targets about $50/MWh as a guideline, against roughly $71/MWh for electricity from a new US nuclear plant and about $38/MWh for solar farms.

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