Global Liquidity Watch: Weekly Update

Global Liquidity Continues to Edge Higher

Global liquidity continues to edge higher. Rising collateral values and falling bond market volatility are underpinning the upturn, but we remain concerned by still lacklustre Central Bank liquidity growth, particularly of the “Big Two”. US Federal Reserve liquidity is muted, while the People’s Bank of China is tightening again. Risk asset markets, gold and cryptocurrencies are sensitive to monetary inflation, i.e., liquidity. Gold is hitting new highs and risk assets are moving higher, but crypto has lost momentum. A sign that liquidity conditions are supportive but not abundant.

Note that January data has been updated to include the results of our broad monthly analysis of 90 countries.