Daily update
Daily update
- Federal Reserve President Williams said banks were fine, but bank lending standards might tighten. This may reflect structural changes. Recent events shifted the dynamics of bank runs. Academic analysis suggests the social media echo chamber helped promote deposit flight, and digital banking makes deposit flight faster. Over the longer term, banks may tighten lending standards to deal with these threats.
- The ECB offers an account of its last policy meeting (when countless people sat around the table for a very short time to decide policy for a dysfunctional monetary union). Investors expect further rate hikes, and the information today is unlikely to give insight into how big the ECB’s policy error will be.
- Europe is proposing emergency curbs on Ukrainian grain imports because they are depressing prices too much. This is news to European consumers, who keep being told the war in Ukraine is why food price inflation is scandalously high. In developed economies, food prices have little to do with agricultural prices.
- The US comic soap opera of “default or debt ceiling” has started. US House Speaker McCarthy proposed measures they know will be rejected. US President Biden called those measures “whacko notions.” Traditionally, investors ignore this farce, or just grab popcorn and prepare to be entertained by the slapstick.
