The CrossBorder Capital Blog

The Spectre Looming Over Bonds   A consensus trade that hasn’t worked too well in 2023 is to buy long duration government bonds. The US Treasury market has ranged sideways; Bunds have sold off, while UK gilts have retested their September 2022 ‘panic’ lows. Worryingly, the future outlook is not great. Although inflation is skidding, policy interest rates are likely to remain relatively high in the West, especially given robust economic data and underwhelming signs of corporate credit problems. On top, relying on foreign investors to buy the fast-rising coupon supply is becoming more problematic given geo-political tensions. Set against this backdrop, bond term premia are at or near historic lows. Odds are they could rebound and more than offset any plausible fall in policy rates.     See our latest published research, Global View: The Spectre Looming Over Bonds – 22 nd July 2023  

Did Yellen Just Signal A 'Buy' For Markets? ·          Emerging Market Liquidity Index (EMLI) hit 72.5 ('normal' range 0-100) ·          Cross-border Capital inflows above average index at 66.9 ·          Chinese Liquidity Index high 86.0 reading ·          EM Private Sector liquidity robust and not signalling upcoming recession     See our latest published research, China and Emerging Market Latest GLI™ – July 2023  

Weaponizing The Yen?   ·          Global Liquidity Index (GLI™) ticks up to 21.3 (range 0-100) ·          Robust levels of private sector liquidity (33.5) are not consistent with major upcoming recession ·          World Central Bank Liquidity higher at index of 24.6 (32.3 EM ex China). China’s PBoC   has been forced into a policy flip-flop by weak Yuan ·          Cross-border flows (EM index 66.9) and Foreign US dollar holdings are again expanding. Flows heading towards Asia and being monetized         See our latest published research, Global Liquidity Latest – July 2023  

Weekly Liquidity Update: Global liquidity conditions weaken   Latest weekly measures derived from Central Bank balance sheet data show global liquidity conditions weakening (-5.2% 3m ann.)   Shadow monetary base and collateral values (rising bond yields) have both seen a sharp slowdown   Fed base effect and ECB loan repayments are the main drivers   We believe this is a temporary setback and expect liquidity conditions to pick up again during 2H 2023 and not to peak until early 2026       See our latest published research, Weekly Global Liquidity Update 7 th July 2023  

Did Global Liquidity Just Jump By 60%?   The celebrated 'It's the economy, stupid!' remark made about Clinton's 1992 Election victory should be reworked and applied to the current falling inflation environment. A drop in underlying inflation from 6% to 2% is equivalent to a whopping 158% rise in Global Liquidity.       See our latest published research, Global View: Did Global Liquidity Just Jump By 60%? – 3 rd July 2023