Global Liquidity Deteriorates, but Macro Optimism for Q1 2025 Persists

The AE Global Liquidity Heatmap continues to show an increase in red plots, indicating a sustained deterioration in global liquidity conditions.

However, as mentioned in our weekly update—despite the Federal Reserve reducing its pace of tightening for the fourth consecutive week, the net liquidity rate of change remains negative.

DXY is currently pressuring a weekly resistance level which, if rejected, may act as the catalyst for China to start implementing easing measures.

While the current outlook definitely implies bearish price action and de-risking by a significant number of market participants, Q1 of 2025 still remains bullish from a macro standpoint.

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