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Falloff in revenues in the face of rising need to provide income support for the unemployed (tourism) have reduced Puerto Rico's near term cash flow.

wsj.com/articles/puert…
Revenues from oil/ gasoline taxes appear to have fallen especially sharply

aafaf.pr.gov/assets/fy20-we…
Core (i.e. domestic") revenues from the personal income tax, corporate income tax (which is influenced by Federal expenditures on disaster aid) and the sales and use tax are projected to fall by ~ $1.5b (in the governor's fiscal plan)
The governor's fiscal plan showed a primary deficit (so no funds for debt service beyond the existing payments on the new COFINA bonds) in FY 21 (starts in June) and FY 22.

Seems like the board agreed

aafaf.pr.gov/assets/2020-fi…
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Brad Setser
@Brad_Setser
Geopolitical tension between the US and China is obviously weighing on the yuan right now.

But if you just look at the March and April intervention proxies, there is absolutely no sign of pressure.

1/n
The settlement number includes the state banks, and imo it is more reliable than PBOC's balance sheet number (the PBOC seems to try hard to keep balance sheet reserves stable, so it is a bit too stable).

and settlement has been in the +10b to 15b range the last 2ms

2/n
The puzzle broadly speaking is that the CNY's relative weakness (v the USD, the story v the basket is a bit different) would normally be associated with outflows and some sales, and we haven't seen that in March and April

3/n
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Brad Setser
@Brad_Setser
Discussion of "deglobalization" should be grounded in graphs like these (from @ggaulier) -- which show a significant reduction in China's measured openness to imports (and less reliance on exports) subsequent to the global crisis.
Trump's tariffs managed to achieve a small bit of deglobalization (fall in imports v domestic output) at the end of 2019 -- but the US unlike China is still more open to imports (on this measure) than in 09-10.
In general, the work of @ggaulier shows a slowdown in the pace of integration outside of China, and an absolute reduction in integration (dating back to before the global crisis) in China.
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Brad Setser
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Swaps use pretty stable globally, with only the Bank of Japan's use perhaps creeping up ...

Japan has consistently accounted for around 50% of total use of the facility in May

apps.newyorkfed.org/markets/autora…
No secret as to why --

a) Japan's banks and lifers have a big dollar funding/ hedging need.
b) Unlike the Taiwanese lifers who always hedged primarily with their own central bank, the Japanese system largely used to hedge in the market

ft.com/content/df9e34…
Holy grail for flow tracking here will be figuring out who withdrew swaps funding from the Japanese financial system over the last few months ...

Don't think Japan's aggregate dollar funding need has increased by $225b (use of the Fed line) so someone pulled back.
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