Charts of the Week: Manufacturing in a credit crunch, inflation impacts and Thai rice
This week’s charts cover the following data:
Manufacturing gets hit when credit crunches take hold
We’ve previously explored?worries about a credit crunch in the US. This week, we turn to big business – showing the historic link between tightening loan conditions and manufacturing output.
This chart compares the Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS) with the Institute for Supply Management’s purchasing managers index (PMI), the well-known survey of manufacturing executives.
PMI readings below 50 indicate economic activity is contracting. For the SLOOS series, which tracks Commercial & Industrial (C&I) loans, the inverted axis shows the net percentage of bankers reporting tightening credit standards. (I.e., a negative reading is good news, as it means more loan officers are reporting that standards are easing.)
The simultaneous troughs in previous recessions are clearly visible – as is the tandem move today; PMI has shown contraction for six months.
The French are economising on food as inflation bites
As French food inflation surged, recently accelerating to an annualised 15 percent rate, households coped by imposing spending discipline unseen in recent history. (Emmanuel Macron’s government, meanwhile, moved to cap retail prices for staple foods in March.)
This chart shows monthly food consumption in constant 2014 prices, removing inflation from the equation. As households broadly grew more affluent, the real household spend increased gradually from 1980 to the late 2010s. After spiking as consumers hoarded food at the start of the pandemic, this measure of spending has plunged almost 19 percent from its peak, as the second panel shows.
While this trend undoubtedly reflects consumers opting for discount retailers, swapping big brands for private labels and choosing cheaper cuts of meat, it’s also reasonable to see the decline as a proxy for a shrinking volume of food consumed.
Decade by decade, inflation and rates hit bond investors differently
Tip: this chart allows for?change region?functionality.?
This chart visualises the environment for buyers of French bonds over the decades, assessing the interplay between interest rates and the inflation that erodes real returns.?
Our chart shows the evolution of real 10-year yields (subtracting inflation from the absolute yield), as well as month-by-month divergence from the decennial average.
The disinflationary 1980s and 1990s were a golden era for fixed-income investors in many countries; after inflation, French bonds yielded well over 4 percent for the better part of 20 years.
领英推荐
The current environment is even tougher than the famously inflationary 1970s. That decade saw real 10-year yields average little more than zero – while since 2020, the average real yield is well into negative territory.?
Don't forget to subscribe to receive our Charts of the Week email direct to your inbox!?https://ow.ly/xk0050NgpQA
Macrobond News
Register for our May 25 webinar: Assessing the global macro landscape - how did we get here and how should investors position themselves?
Hear form industry experts Simona Mocuta , chief economist of State Street Global Advisors ; Phillip Colmar , managing partner and global strategist at MRB - The Macro Research Board ; and former PineBridge Investments chief economist Markus Schomer as they discuss the current macro landscape, how central bank actions have affected various asset classes, and how investors should position themselves.
Guest blog: Why US inflation will slow and help the Bank of Japan
Guest blogger Harry Ishihara uses Macrobond charts to show how this indirect US support for the yen will help attain central bankers’ goal of “good” inflation.
Replay our May 16 webinar - Unlocking the secrets of Saudi Arabia's economic boom: The driving forces behind its phenomenal growth
Our panel of local experts comprehensively explored the macro view of the region and Saudi Arabia's fiscal and economic trends. This is a great opportunity to gain a deeper understanding of the Vision 2030 diversification plan and its impact on the wider MENA region.
One platform. Unlimited insight.
Macrobond delivers the world’s most extensive?macroeconomic?and financial data alongside the tools and technologies to quickly visualise and share insights - via beautiful, dynamic charts and tables.
By putting a world of intelligence at your fingertips, we empower you to make more informed investment decisions, more quickly.
Don't forget to read the latest edition of our Charts of the Week newsletter here: https://ow.ly/h3Cv50OrZC9