FT Unveils China's “Sock 2.0
My work on this earth may be nearly over -- or at least my work of the last 4ys could be in its final chapter. The FT's Big Read is on the China sock 2.0 (one of my favorite phrases) and the pink paper endorsed the concept of "shadow reserves"! 1/ https://t.co/sb3xUhQtgk
Q1 Exports Up 15% YoY, Volume Gains Likely Higher
it is actually a good number. it comes after a super strong February (new year effect + real growth) and off a high base. y/y export growth for q1 was 15% in dollar terms almost certainly more in...
China's March Exports Strong Despite Modest Trade Surplus
China's March trade numbers are stronger than they appear at first glance. Strong imports pulled down the trade surplus, but export performance was actually strong -- last year's March base created a high hurdle for the y/y comparisons 1/ many https://t.co/OmqlCGNNNd
Turkey's Currency Intervention Masks Pre‑Existing Current‑Account Deficit
Turkey obviously intervened heavily to limit depreciation pressure (and an inflationary shock) in March (and I guess bought a bit of fx back last week). But Turkey's real problem is that its current account deficit was widening even before the oil...
Turkey Drains Securities and Gold to Fund FX Intervention
Indeed. Turkey sold a ton of fx (essentially draining its securities portfolio) and sold/ swapped gold to generate even more fx to fund its massive March intervention ... 1/x https://t.co/RsDslEBwvB
China Receives Global Concessions, Offers Little
Am sure Yufan describes the basic view of many in Beijing -- At the same time, the world has already made enormous accommodations to China, and I am not sure China has made much effort to accommodate other creditors that also...
IMF Acknowledges Currency Intervention Drives Depreciation, Improves Balance
Joe Gagnon (@GagnonMacro) should take a victory lap; the IMF has conceded intervention does have a real impact -- "A growing empirical literature finds that such intervention can systematically generate real exchange rate depreciation and raise current account balances" 1/
Asian Q1 Trade Surplus Rises as Chip Exports Soar
Rather large increase in the trade surplus of a couple of important Asian economies in the first quarter. Weak oil and gas import volumes in March, but mostly surging chip exports https://t.co/LP5kTo4Nfs
China Touts Domestic Demand, yet Auto Sales Slump
China's leaders now at least give lip service to supporting domestic demand -- and sometimes even claim not to want to rely on exports for growth. But in at least one prominent sector, domestic demand is down (autos) 1/ https://t.co/jZxOmf68t9
Pre‑crisis US Deficits and Debt Issuance Stayed Below 2% GDP
Before the global financial crisis, in 06 and 07, the US fiscal deficit was under 2 percent of GDP and note issuance was under 1 pp of GDP in 07. That was also the time of peak...
Tolls on Iran, Oman, DJT
Well, an Iranian toll -- Or an Iranian, Omani and DJT toll -- Would create a financial incentive to build this alternative export infrastructure for the GCC's oil and (more difficult) gas
Chinese Banks' Net Dollar Exposure Surges Dramatically
To be blunt, no one gave this memo to China's banks External dollar assets up, external dollar liabilities down -- net long dollars way up. and we already know from other banking data that the dollar long increased significantly in...
China Trims BoP Surplus; US Deficit Likely Understated
I have noted, with concern, how China shades down its BoP goods surplus after a 2022 statistical adjustment. It should also be noted that the preponderance of evidence (see today's reporting by @AnaSwanson ) suggests that the US customs deficit is...
IMF Flags Rising Imbalances, Revives Currency Manipulation Label
Happy to see the IMF has noticed the expansion of global current account imbalances -- And guess what, the IMF seems to have rediscovered the idea that currency manipulation can drive imbalances (though manipulation has been renamed "macro-industrial policy" ......
China’s Reported Exports to US Dwarf Imports Post‑301 Tariffs
Indeed, an important question -- Ever since the 301 tariffs were introduced, the exports that China reports to the US have far exceeded US imports -- and now the gap is exceptionally big 1/3 https://t.co/b1eDSKKtRz
MBS's Grand Plans Hampered by Severe Cash Shortage
"The problem is there was never enough cash to fund all his [Crown Prince MBS] ambitious initiatives." Indeed. That's why measures lie the balance of payments breakeven are useful. The Saudis needed $90 plus oil -- or near...
Nominal Trade Rebounds: Exports Surge, Imports Match Biden Levels
A thread on the February 2026 trade data, with some answers and some questions -- Both nominal imports and nominal exports (ex petrol) are growing again -- with surprising strength in nominal exports and nominal imports back at their end Biden...
Seeking List of Pharma Firms Without US Agreements
Any one know which pharma companies have yet to strike a deal with the US? (I don't ... my sense is that most have but haven't kept a tally) 1/2 https://t.co/bYYde5ZaIm
US Current Account Deficit Steadies Near 4% of GDP
True, but also a bit deceptive. The spike in q1 overstated the "true" current account deficit, and the unwinding of gold and pharma front running depressed the h2 deficit. The underlying current account deficit is still...
Saudi's 2025 Break‑even Oil Price Stays Near $100
Petrodollar (or lack of them) update: Saudi 2025 balance of payments data is out, and the Saudi "current account" break even oil price (based on ~ 7 mbd in exports of crude/ product) is still right around $100 a barrel 1/
US Imports Return to Pre‑Election Levels Despite Front‑Running Effects
I think Marvin (@ThematicMarkets) is reasoning too much from accounting identities here -- and still not adjusting enough for the enormous impact front running had on all US external variables in 2025. Let's start with imports -- they are basically back...
Korea Posts $25B March Trade Surplus on Chip Boom
Crazy March trade surplus for Korea ($25b a month, $300b annualized) Strong chip exports continued. And presumably a bunch of expected tankers didn't arrive so fuel demand was met out of inventory 1/2 https://t.co/NGcasg9i4v
Report on Global Imbalances Useful Yet Lacks Hard‑Hit Insight
A few reactions to the Bai, Gopinath, Rey and Weber report on global imbalances commissioned by the French G-7 Presidency. It makes a number of important and useful points, but could have been much more hard hitting 1/ https://t.co/tGPWHoSwYs
US Industrial Production Flat, Not Soaring.
My friend Thematic Markets gets this wrong -- US industrial production (using the series that leaves out chips, which is still benefitting from Biden era policies) is flat not way up 1.x https://t.co/pYA4LZEt8F
Yuan's Global Reserve Share Declines Over Five Years
Well, there are a lot of meanings of global reserves currency that go beyond the currency held in formal foreign exchange reserves. But the yuan's share of reserves has actually slipped over the last 5 years 1/2 https://t.co/h07pcXMaYn
Central Banks' Dollar Reserves Inch up, Growth Still Modest
Dollar reserves held by the world's central banks rose a bit in q4 -- But the broad story remains one of modest reserves growth relative to the global economy, or the pace of reserves growth from 03 to 13 1/ https://t.co/B7D4KndRLn
NY Fed Custodial Treasury Holdings Drop Significantly
The FT has a good article on the recent fall in the Treasuries held by the New York Fed's custodial account 1/ https://t.co/q3XrJ1bvlZ
China’s Demand Has Stalled, Not Driven Global Growth
I am a big fan of Chartbook and the collected works of Tooze -- but there is no way to look at China over the last 6 years and conclude that it has been a source of demand for the...
Coupon Supply vs GDP Reveals Misleading Percentage Metrics
not a big fan of doing percentage shares of the outstanding when the outstanding is way up -- here is a chart of coupon supply as a stock normalized v GDP 1/2 https://t.co/yTbJuALpQ8
Feb YoY Trade Data Skewed by Last Year's Weakness
It is always difficult to sort signal from noise in the Chinese data/ trade data, & all the more so in q1. Right now all the February y/y comparisons are distorted by a weak February last year and...
Bank of England Joins Imbalance Club as Asia Surplus Swells
Happy to welcome the Bank of England to the growing club of "imbalancistas" Would just note that if they used the 2025 data rather than the 2024, the return of imbalances would be even more apparent. Asia's surplus went...
FX Reserve Decline Driven by Oil Importers, Not Exporters
Lots of talk about oil exporters in the Gulf selling fx reserves. That may happen. But for now the visible fall in fx reserves is coming from the oil importers (CBRT = Turkey, RBI= India) https://t.co/8prQkznGG6
Bank Flows Explain $3 Trillion China Surplus‑Reserve Gap
As I mentioned on Wednesday, there is a $3 trillion gap between China's accumulated current account surplus since the pandemic and China's unchanged reserves (and a corresponding gap in visible flows into the US) Bank flows make up most of the...
Asian Nations Dumped
Be careful not to confuse changes in valuation and changes in custodial patterns (after Russia's reserves were immobilized) with actual sales https://t.co/zTGz75N9rr
Turkey Likely Used Gold Swap to Fund Lira Defense
Lots of hints that Turkey has done a gold swap to raise FX to fund the central bank's intervention to defend the lira. It didn't show up in the CBRT's reserve disclosure for March 19th (reporting is lagged a week). ...
China's $3T Surplus Hasn't Boosted US Bond Inflows
A thread on some work in progress, on China's US bond portfolio As the chart below shows, China's cumulative current account surplus has increased by $3 trillion since the end of 2019 -- and inflows into the US in the US...
Oil Importers Intervene; Turkey's Thin Reserves Raise Risk
A lot of oil importers have been intervening pretty heavily to keep their currencies from depreciating and adding to the oil price shock. Turkey is one of the more interesting cases, as its fx reserves remain limited 1/2 https://t.co/zsikWfgTxD
China Struggles to Pair Surplus with Limited Foreign Asset Growth
China's dilemma is that while it can reduce SAFE's exposure to the Treasury market, it hasn't found a way to consistently combine a big external surplus and limited state foreign asset growth. The state banks are doing something...
US Current Account Deficit Halves From Q1 to Q4 2025
Wild swings in the US quarterly current account deficit over the course of 2025 -- from close to 6 pp of GDP in q1 to well under 3% of GDP in q4 ... 1/ https://t.co/2EuT5nM3jZ
Oil Surplus Dwarfed by Massive Asian Capital Excess
Three big picture observations about the oil surplus (petrodollars/ petroeuros/ petroequities are all downstream of this) pre Hormuz A) The oil surplus is modest relative to the surplus in Asia. Chinese state banks and offshore deposits of Chinese exporters are...
Policy Interventions Boost Export Growth in Vehicles, Batteries
Interesting "Consistent with these channels, Figure 3 shows that sectors with more policy interventions experienced faster export growth over the 2017 to 2024 period. The relationship is especially pronounced in motor vehicles and battery-related products" 1/
Understanding Persistent Foreign Private Demand for U.S. Treasuries
This raises an important question -- namely how should we understand ongoing demand for Treasuries from private investors abroad? 1/ https://t.co/IVZNahIfEc
Dollar Reserves Stalled This Decade After Prior Surge
The thing is -- There has been NO dollar reserve accumulation in aggregate over the last ten years. And there was a ton of dollar reserve accumulation during the preceding 10ys (way more than needed for precautionary purposes) https://t.co/GGry0kCOk2
German Growth Drag Stems From Both Imports and Exports
Is the big drag from net exports on German growth from imports or from exports? It is of course from both. This is the data for nominal trade with China for the full euro area (no...
Exports Decline Since 2022 Breaks Trade Symmetry
Exports have been falling since 2022. In normal times, one would expect symmetric growth in exports and imports, (offsetting contributions). The recent decline in exports is thus unusual https://t.co/KYVDyKfsJI
Dollar Reserve Growth Didn't Fund US Deficit
I spend a lot of time tracking dollar reserve growth. Probably more time than anyone at the Fund. And I absolutely believe that the surge in reserve growth contributed to the rise in imbalances before the...
Europe and China Lead Global Imbalance Reassessment
The risk of an escalation in the Gulf seem reduced for at least a few days. So maybe there will be a bit of interest in my (somewhat novel) reevaluation of the relative contribution of Europe and China...
Bretton Woods: US Capital Outflows, Not Deficits, Built Global Reserves
This isn't quite true -- at least not always. Under the initial Bretton Woods system capital outflows (including FDI) from the US provided the buildup of fx reserves globally; the US didn't run a current account deficit until the 70s. 1/2
China, Korea, Taiwan, Singapore Led Pre‑
But it is more accurate -- Before the latest oil shock the really big surpluses were China, Korea, Taiwan and Singapore (more an investment income dollar but ... )
Eurozone China Deficit Widens From Imports and Falling Exports
Euro area deficit with China rising again -- this time on higher imports as much as on lower exports 1/ https://t.co/MzIpVJR3sZ