Global Liquidity Watch: Weekly Update

Global liquidity levels continue to rise

Global liquidity levels continue to rise. The main drivers are rising collateral values and lower volatility which directly affects the collateral multiplier. The Shadow Monetary Base has been underpinned by these rising collateral values, but it is being held back by lacklustre Central Bank liquidity growth. The latter contrasts with the recent headline grabbing interest rate cuts. Digging deeper into the Central Bank data shows that the PBoC has been injecting liquidity. The Fed data at first glance look weak but we argue that an underlying monetization is already underway. The ECB and Bank of England though are still restricting liquidity growth.