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Sober Look is a no-hype financial markets/macro blog that typically relies on data analysis, primary sources, and original materials. We keep it concise, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include financial markets, banking, asset management, risk management, derivatives, global economy, policy, and regulation, with the emphasis on finance education. Follow him on his blog or twitter.

Markets

US yield curve now steeper than most developed countries

Sober Look Dec 30, 2013

The treasury yield curve remains quite steep by historical standards. Typically such steepness is driven by expectations of higher inflation in the future. But as discussed earlier, that is not the case in the US. Instead it is the…

Markets

US credit risk appetite hits euphoria

Sober Look Dec 27, 2013

US corporate credit is outperforming other forms of credit assets such as commercial real estate. A good way to see that outperformance vs. global risk assets is in the components of the Credit Suisse Risk Appetite Index. For the first time…

Economy

The unintended consequences of Abenomics on consumers

Sober Look Dec 26, 2013

The danger of Japan's current policy (Abenomics) is that the outcome could turn out to be the exact opposite of what was originally intended. With wages stagnant, these import-driven price increases are hitting the Japanese consumer quite…

Economy

Growth rates in consumer income and spending have diverged

Sober Look Dec 23, 2013

Consumer spending in the US accelerated in November, boosting projections for the GDP growth in the fourth quarter. While incomes grew as well, the rate of increases from the same period last year has slowed. With confidence improving,…

Markets

The big yield curve steepener unwind

Sober Look Dec 22, 2013

Since the Fed announced the reduction in securities purchases ("small taper"), the treasury curve has undergone some strange adjustments. Why would the 5-year note sell off the most while the long bond rallied?

Economy

What is the labor participation rate telling us?

Sober Look Dec 21, 2013

There is no question that labor force participation in the US has been falling as more people drop out of the workforce. But that measure could be misleading because as the population ages, the workforce will shrink naturally. Perhaps a…

Economy

Two key reasons for Japan’s record trade deficit

Sober Look Dec 18, 2013

Yen weakness has not generated the expected benefits and import demand has grown considerably

Economy

What happens to banks’ balance sheets during a downturn?

Sober Look Dec 18, 2013

Credit underwriters pride themselves in their ability to cut lending when they sense that economic fundamentals have changed for the worse. For example one often hears bankers talking about passing on deals in 2007 because of "not liking…

Economy

Germany and France’s economic divergence

Sober Look Dec 16, 2013

The Eurozone recovery continues to be uneven, powered primarily by a pickup in export-driven manufacturing and with only some nations participating. In particular we are witnessing a significant divergence between the area’s two largest…

Economy

Inventory building poses risk to US growth numbers

Sober Look Dec 11, 2013

In spite of some relatively strong economic data coming out of the US, risks to near-term growth remain. One of those risks comes from higher than expected inventory build. We saw this come through in the latest GDP numbers.