Liquidity is being drained fast...
The Tide Is Going Out…Fast Having previously warned of gathering problems from Q2, the economic and financial news flow is getting worse not better, and we believe asset markets are increasingly vulnerable to a meaningful shake-out. Risk appetite levels remain elevated and yield curves are flattening against a backdrop of fast tightening Global Liquidity. Not only are the two critical channels – Central Bank liquidity and cross-border flows – in retreat, but China, which dominates the pool of World savings, is now halting their recycling back into Western markets.