Anna Wong
@AnnaEconomist
Chief US Economist, Bloomberg LP @economics. Former Fed/CEA/US Treasury, PhD @uchi_economics BA @UCberkeley. All opinions are my own.
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“A 100 billion increase in Treasury supply currently raises five-year yields by approximately 3 basis points.”
New #IFDPPaper#: Estimating Yield Impacts of Treasury Demand and Supply Changes: #EconTwitter#
Warsh is a political genius. And in playing the politics he protected the Fed’s independence.
Whenever Warsh turns to specifics and get precise, it really stands out (because so much of the rest is fillers). Today he introduces another “Warsh” indicator for watching geopolitics.
The three things he has told us he watches:
1) share of the 199 pce components at >3% inflation at 6 and 12 month annualized
2) the second derivative of ai capex
3) and today, on watching the inflation spillovers from geopolitical – the difference between spot prices for corn, soybeans, wheat and so-called crack spreads.
Of those 3, the first likely came down in August, the second probably ex post will have proved to have peaked this year.
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“It’s not rising market power, but new technology—AI being the latest example—that is probably the most important force reducing the labor share” of wealth, writes Chicago Booth’s Brent Neiman. @nytimes
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Today's Treasury International Capital data (for July) provided more evidence of the ongoing shift in foreign demand toward US risk assets (and away from "saf-ish" Treasuries)
1/
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This.
Meaningfully increasing prospective Federal deficits is a reason to sell bonds, not buy them.
This is true whether you increase deficits by going to war or by the Fed raising rates instead of cutting rates.
Check to you Warsh and Bessent.
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Ok thats terrifying
Pretty amazing that the inflation forecast really did not take into account the likely downward revisions two weeks from today.
“A 49 percent plurality of Americans said they would support a local candidate who proposes a statewide data center moratorium “to ensure that there is no impact on energy and water costs in the area.” Just 28 percent said they would vote for the candidate who proposed tax breaks for data centers to ensure economic growth in the state.”
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🫣 describes how I feel about the hike tomorrow.
Hiking while labor share is plummeting?
Labor share at its lowest level, 52.8 percent, in second quarter 2026 #BLSData#
Tomorrow, one possible outcome after the Fed hiked, is that we may discover that tightening doesn’t lower long-term yields. If that happens, it would confirm that fiscal is the culprit in the whodunnit saga.
By raising the government’s marginal funding cost, a rate hike enlarges future interest deficits and increases the amount of debt Treasury must place with private investors. If investors doubt that fiscal policy will offset those costs, the term premium could rise, pushing long yields higher and reinforcing the deterioration in debt service.
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This is the “sandwiched generation.”
BREAKING: US consumers aged 40-49 now account for 26.8% of new consumer bankruptcies, their highest proportion since Q3 2015 and the largest among all age groups.
At the same time, the 50-59 group represents 23.1%, bringing the combined proportion of Americans aged 40-59 to 49.9%, the largest since Q1 2017.
To put this into perspective, this figure peaked at 54.3% in Q4 2011, following the 2008 Financial Crisis.
Furthermore, those aged 70+ now make up 21.5% of all new consumer bankruptcies, their largest proportion since Q2 2017.
Meanwhile, Americans aged 18-29 now account for only 5.9% of new bankruptcies, their lowest percentage since Q2 2014.
Older Americans are falling behind on their debt.
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For once Zandi and I agree on something
⚠️ Moody’s Analytics Chief Economist Mark Zandi is warning that the odds of a serious Federal Reserve policy mistake are “uncomfortably high and rising.”
His argument: Higher rates cannot fix supply-driven inflation, but they can trigger layoffs and weaken an already fragile non-AI economy.
Worth reading:
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The key stylized fact on the global bond market sell-off is that - if you run good fiscal policy and kept your debt under control - you're not hit as hard as countries that failed to do that. Markets are differentiating who's in trouble and who isn't...
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@geosci_nerd @TheStalwart I have been also been called a Bloomberg leftist CCP member as well.
October 2017, then Fed chair Janet Yellen talked about how wireless phone services generated likely a one-off, temporary fall in inflation.
Hard to believe that this category is what seals the deal for a rate hike. A big mistake.
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@TheStalwart I’m a Bloomberg terminal sis.
Supercore CPI jumped 0.51% m/m in August, which is getting plenty of attention this morning and sent Sept rate hike odds surging briefly to ~100%.
But it’s worth looking under the hood: 29bps (more than half of the 0.51% increase) came from wireless phone services alone.
Unless the Fed plans to hike rates to get your cell phone bill under control, I’d be careful reading too much into the spike.
A quick 🧵
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Uh oh
BREAKING: Former Federal Reserve Chair Jerome Powell has sold a waterfront estate on Maryland’s Gibson Island for $7.2 million in an off-market transaction, per Realtorcom
The six-bedroom, eight-bathroom residence spans approximately 7,155 square feet on a 2-acre property overlooking the Magothy River.
Built in 2004, the shingle-style home features water views from its principal rooms, along with a waterfront swimming pool, private pier, boat lift, stone terraces and landscaped grounds.
Powell purchased the property for $3.86 million in 2006, generating a gross increase of approximately $3.34 million, or 87%, over 20 years.
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