US-CHINA: US Sec State Blinken Tells FM Wang: US Is "Open To Cooperation"
Sep-23 17:22
Per Reuters, a senior Biden Administration official has provided details of the bilateral meeting between US Secretary of State Antony Blinken and Chinese Foreign Minister Wang Yi which concluded approximately one hour ago.
- The meeting is one of the most significance bilateral engagements of the UNGA and the first high-level diplomatic interaction between US and Chinese officials since House Speaker Nancy Pelosi's (D-CA) congressional delegation to Taiwan in early August.
- Official: "Blinken stressed the need to maintain open lines of communication."
- "The US remains open to cooperation with China where interests intersect."
- "Blinken and Wang had a direct and honest exchange on matter related to Taiwan."
- "Blinken stressed to Wang that there was no change to One-China Policy."
- "Blinken told Wang there would be implications for China if they materially support Russia's invasion, or assists in evasion of sanctions."
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US: NY Fed On 40% Of US Inflation From Supply-Side Issues
Aug-24 17:11
- Following yesterday’s NY Fed note that pass-through of import prices and wages to domestic PPI more than doubled during the Covid period (coefficients below), a note from this morning finds that 60% of US inflation over the 2019-21 period was due to demand and 40% from supply-side issues.
- i.e. “our work shows that inflation in the U.S. would have been 6% instead of 9% at the end of 2021 without supply bottlenecks. […] In the absence of any new energy or other shock, it is therefore possible that the ongoing easing of supply bottlenecks will cause a substantial drop in inflation in the near term.”
- Re yesterday’s note, the summary was that a 10% increase in import prices and wages associated with traded sector PPI prices rising 7.4% in 2021 vs 3% in 2013-20 or 3.4% vs 1.6% for non-traded. One implication of which is that USD strength could have a greater dampening effect than a relatively closed economy would normally indicate.
- Link: https://libertystreeteconomics.newyorkfed.org/2022/08/how-much-did-supply-constraints-boost-u-s-inflation/
US: Data From Special Elections Suggests Swing To Democrats In House Of Reps
Aug-24 17:08
Data journalist for the Economist G. Elliott Morris has tweeted that data from four recent special elections has significantly swung the needle towards the Democrats for control of the House of Representatives.
- Morris: "So, based on our not-yet-released election model, special elections so far this cycle are consistent with Democrats winning 51.3%* of the two-party vote for the House in Nov. That is almost exactly the threshold they need to keep their majority. Big increase after NY-19 and NY-23."
- See earlier bullet for more info on NY-19 special election: https://marketnews.com/special-elections-indicate-...
- Morris attached some caveats to the analysis: "(1) We don't have final totals in the AK-AL special yet, so that's not in our model. (2) There is time for the metric to change before election day, this is just where things are now. (3) The special election forecast is not perfect, MOE [margin of error] is a bit over +/- 2.3pts today."
- Special elections are often closely watched for signs that one party outperforms the baseline partisanship of the district. So far there have been four special elections since the politically consequential decision by Supreme Court to roll back Roe vs Wade, seen by Democrat strategists as a seismic event which could changethe midterm calculus, in all of these special elections the Democrat candidate has outperformed expectation.
- FiveThirtyEight: "...given how these two elections [NY-19, NY-23] are part of a larger pattern of good results for Democrats over the last two months, they suddenly look a lot more like signal than noise."
- While the GOP remains favourite to retake control of the lower chamber in November, it should be noted that much of the data which underpins that expectation is based upon a calculus which tends to downplay the significance of the SCOTUS decision.
US TSYS/SUPPLY: Review $45B 5Y Note Auction Tails
Aug-24 17:04
Tsy futures holding near midday lows after $45B 5Y note auction (91282CFH9) tail: 3.230% high yield vs. 3.217% WI; 2.30x bid-to-cover vs. 2.46x last month.
- Indirect take-up recedes to 61.18% vs. 66.37% high in July; Direct take-up climbs to 18.22% vs. 16.81% prior; Primary dealer take-up 20.61% vs. 16.81%.
- The next 5Y auction is tentatively scheduled for September 27.
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