Global Liquidity Watch: Weekly Update

Global Liquidity Rising But At A Tempered Pace

Global liquidity is rising but at a tempered pace. The upturn rests on two factors. One is the weakening US dollar. The other is the improvement in Central Bank liquidity, specifically the Fed’s and PBoC’s. While China’s policymakers continue to speak of expansion and support, the Fed is being more guarded, and this is a cause for concern. The importance of liquidity is clear from the recent weakening in liquidity-sensitive assets such as Bitcoin and risky assets, which have been hit by the slowdown in liquidity growth in Q4 2024. Q1 has seen a recovery but should it falter, crypto and equities will struggle to make up lost ground.