Global Liquidity conditions falter … again

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Global Liquidity conditions falter … again

 

Global Liquidity conditions falter … again. The root of the problem is weaker shadow monetary base growth. The Fed and Bank of Japan are behind this latest development. This is worrying. Tight liquidity conditions put pressure on financial assets. Already, bond market volatility, as measured by the MOVE, has ticked higher. A rise in the MOVE negatively affects the collateral multiplier, which in turn affects global liquidity. This is borne out by the charts below. Caution! Near-term developments are not good but we still remain upbeat longer-term and continue to believe the Global Liquidity cycle bottomed last October

 

 

 

See our latest published research, Weekly Global Liquidity Update 26th September 2023

 

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