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Tag Archives: financial markets

How Much of US Federal Debt Is Held by Foreign/International Investors

As a share of debt held by the public (i.e., excluding intragovernmental holdings). Figure 1: US Federal debt held by foreign & international investors as share of Federal debt held by public. Source: FRED and author’s calculations. The recent decline in the ratio arises due to the large increase in total debt held by the public (held by the public includes Fed holdings).

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Real Borrowing Costs for the US Treasury: May 2021

As of May 2021, the nominal 10 year Treasury rate is 1.6%. The real rate is -0.9%. Figure 1: Nominal 10 year Treasury yield (blue), 10 year TIPS (red), both in %. NBER recession dates shaded gray; latest recession assumed to end 2020M04. Source: Federal Reserve via FRED, Treasury, and NBER. It’s noteworthy that — despite the runup in real and particularly nominal rates — May 2021 real rates are still below anything experienced in the the recovery from the Great Recession, and only slightly...

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The Employment Surprise and Bond Yields

Given the employment surprise (NFP 266K actual vs. 978K expected), it would be remarkable if interest rates did not respond. Stock indices did drop, then recovered to pre-surprise trend. Five year bond yields did drop somewhat. Figure 1: Treasury five year constant maturity yield (blue, left scale), and TIPS five year constant maturity yield (red, right scale). Source: Treasury via FRED. Both nominal and real yields fell with the surprise, so that the simple inflation breakeven fell one...

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Financial globalization

Financial integration of countries and financial globalization led to an extraordinary rise of foreign assets and liabilities as a share of GDP, followed by stability of total flows since the global financial crisis of 2008-2009. The apparent stability has been marked by an underlying metamorphosis of cross-border finance, with de-banking and rising foreign direct investment and non-banking financial flows. Blind spots and potential instability remain.

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