Taper Talk and Taper Walk

Taper Talk and Taper Walk

 

Latest weekly balance sheet data from major Central Banks show aggregate liquidity growth ticking up to 9% (3m ann.), but still in the narrow 5-10% range established since June. The G4 (ex. China) equivalent is higher at 10.9%. The Fed continues to outpace all other major Central Banks, having switched direction in July while other majors continued to curtail liquidity growth. Despite assurances of continued monetary accommodation in this week’s policy statements from the Bank of Japan and Bank of England, the data show that liquidity growth peaked in late-Spring and has been trending lower since. And the early-September announcement by the ECB of a slower pace of asset purchases looks to have come after the event : ECB liquidity growth slowed dramatically in mid-June and has not recovered.