by Kavan Choksi

The US economy has so far proved to be more resilient to higher interest rates than most economists predicted. Employment numbers look better than expected, and the likelihood of a recession has continued to fade. Inflation, while remaining stickier than most would hope, has dropped at a reasonable pace and sits just above the target of 2% that policymakers prefer.

by Kavan Choksi

The year began in the middle of a historic rate hiking cycle aimed at taming inflation. The stress of higher rates seemed to portend an inflection point in the economy. In the first quarter, a series of bank failures threatened system-wide contagion. Tremors in the banking system fueled recessionary fears, which were amplified by slowing US GDP growth. The soft landing eyed by the Federal Reserve and hoped for by optimistic investors started seeming less likely.

By Kavan Choksi

Sometimes business decisions lead to success, and a bank’s profit grows. Other times, business decisions, coupled with bleak economic conditions, result in losses. In banking, such losses can lead to a sudden drop in confidence among the bank’s customers, the depositors demand their money, and the run on the bank causes a quick collapse.

By Kavan Choksi

In January 2023, the U.S. reached its debt ceiling, and Secretary Yellen announced that the Treasury would begin taking “extraordinary measures” to avoid defaulting on any U.S. obligations until a bill passed to increase the debt limit. Such measures have become relatively common over the last two decades.

By Kavan Choksi

In a surprise move that shocked markets, the Bank of Japan tweaked its yield curve control (YCC) policy by doubling the cap on bond yields from 0.25% to 0.5% at its latest policy meeting on December 20.

By Kavan Choksi

Prices at the pump in the U.S. have fallen sharply since the summer surge as gasoline has returned to 1Q:22 levels. Coupled with a warm autumn, falling gas prices have perhaps led to some complacency among Americans when it comes to rising energy costs. But Europe’s ongoing energy crisis continues to create global energy supply worries and economic risk.