New on FinoLib · Volume I: Global Economy
I have just published a new article on FinoLib, my free finance education library: BRICS Currency and Dollar Dominance: Indices and the Yield Curve. It is part of Volume I: Global Economy. Below is a summary of the topic in plain, expert language, so you can follow the idea even before you open the full article.
2.6 BRICS and the Challenge to Dollar Dominance
The idea in plain words
BRICS nations are pursuing de-dollarization through parallel, gradual initiatives, not one dramatic action. The dollar’s share of global reserves has fallen but remains overwhelming, and India is cautious.
Key points
■BRICS began as “BRIC”, an idea coined by Goldman Sachs economist Jim O’Neill in 2001; South Africa joined in 2010, and the group now represents about 48% of the world’s population and roughly 40% of global GDP by purchasing power…
■The dollar’s share of global reserves declined from approximately 71% in 2000 to approximately 58% in 2024.
A closer look
BRICS began as “BRIC,” an investment concept coined by Goldman Sachs economist Jim O’Neill in 2001, identifying Brazil, Russia, India, and China as the fastest-growing major economies of the coming decades. The four held their first leaders’ summit in 2009, added South Africa in 2010 to make it BRICS, and have since expanded to include Egypt, Ethiopia, Iran, the UAE, and Indonesia, with a broader circle of partner countries. BRICS nations now represent nearly half (about 48%) of the world’s population and roughly 40% of global GDP by purchasing power parity.
2.7 US Stock Market Indices
The idea in plain words
A stock market index tracks a basket of stocks as one number, and most weight companies by market capitalization. The stock market is not the economy: an index reflects expectations about future corporate profits, not how ordinary people are doing today.
Key points
■The S&P 500 can rise 20% in a year while millions of ordinary people struggle financially, because the index reflects expectations about future corporate profits.
■In 2022 the S&P 500 fell 19% even as US employment stayed near record highs.
A closer look
A stock market index tracks a basket of stocks together as a single number, allowing people to discuss “how the market is doing” without listing every individual company’s performance. Indices are constructed according to specific methodologies — most weight companies by their market capitalization.
2.8 US Labor Market Data — The Numbers That Move Everything
The idea in plain words
The Non-Farm Payrolls report counts the jobs the US economy added or lost the previous month. It comes out on the first Friday of each month, from the Bureau of Labor Statistics, and it routinely moves stock, currency and bond markets within seconds.
Key points
■It is released at 8:30 AM Eastern Time alongside the official unemployment rate, and it shapes what the Federal Reserve is likely to do next with interest rates.
■A stronger-than-expected report can make the rupee fall and Indian bond yields rise in the same session; on NFP Friday trading volumes spike, spreads widen and reconciliation teams see elevated break volumes.
A closer look
In the US, one monthly report matters more than almost any other economic release: the Non-Farm Payrolls (NFP) report, usually released on the first Friday of each month by the Bureau of Labor Statistics. It counts how many jobs the US economy added or lost in the previous month (excluding farm workers, whose employment is highly seasonal). It is released alongside the official unemployment rate.
2.9 Bonds and the Yield Curve — The Market That Rules Them All
The idea in plain words
Bond prices and yields move in opposite directions. The yield curve normally slopes upward, and when it inverts it has preceded essentially every US recession of the past half-century, though not on a fixed schedule. The 10-year Treasury yield is the world’s benchmark rate.
Key points
■If you hold a bond paying 5% and new bonds pay 7%, its price falls until its effective return matches the market, the mechanism that broke Silicon Valley Bank.
■The 2022–24 inversion was the deepest in four decades, yet a recession, unusually, did not promptly arrive.
A closer look
A bond is an IOU: the issuer (a government or company) borrows your money, pays fixed interest — the coupon — and repays the principal at maturity. Unlike a bank loan, a bond trades hands constantly after issuance, and its market price moves. This produces the single most important mechanical rule in finance: bond prices and yields move in opposite directions. If you hold a bond paying 5% and new bonds pay 7%, nobody buys yours at full price — its price falls until its effective return (yield) matches the market. Rates up, bond prices down; rates down, bond prices up. This is precisely the mechanism that broke Silicon Valley Bank (chapter 3.9: Bank Regulation — and the SVB Case Study): rising rates crushed the value of its bond holdings.
What the full article covers
In the full article I take you through these sections:
■2.6 BRICS and the Challenge to Dollar Dominance
■2.7 US Stock Market Indices
■2.8 US Labor Market Data — The Numbers That Move Everything
■2.9 Bonds and the Yield Curve — The Market That Rules Them All
It includes worked examples, a recap, a reveal-on-click quiz and the official sources behind every figure.
Volume I: Global Economy
Read the full article on FinoLib
The complete article, BRICS Currency and Dollar Dominance: Indices and the Yield Curve, with every worked example, diagram, quiz and source, is free to read in Volume I, Global Economy on finolib.com.
Explore the Finance Education Series: Vol. II — Capital Markets · Vol. I — Global Economy · Vol. III — Finance Encyclopedia · Vol. IV — Finance Careers · Vol. V — Personal Finance