Global Liquidity Watch: Weekly Update

Global Liquidity Growth Continues to Slow

Global Liquidity growth continues to slow, according to our weekly estimates. This is largely due to the US Federal Reserve and the Bank of Japan. The problem has been exacerbated by ongoing QT by the ECB and Bank of England. The People’s Bank of China has been moving oppositely and has mitigated weakness elsewhere. Another mitigating factor is US dollar depreciation. This has boosted the value of non-US Central Bank liquidity and non-US collateral values. Liquidity leads risk assets and cryptocurrencies by some 3 months. Liquidity has slipped through June, but it is still up on the quarter. Based on current levels, liquidity-sensitive assets may lose momentum in Q3 but will likely avoid a correction. For now, they are underpinned by the liquidity boost in Q1.

This week’s data has been updated to include the May results of our broad monthly analysis of 90 countries