Global Liquidity Updates

The AE Global  Liquidity Oscillator continues its strong upward trend, maintaining consistent positive signals.

This continued upward momentum reveals a positive outlook in the coming months.

Current trajectory suggests that global asset markets could experience enhanced stability and growth.

With liquidity surging and geopolitical tensions brewing, we are closely watching how these variables will shape market behavior over the next few quarters.

Additionally, as our seasonality chart indicates, the months ahead historically show strong liquidity growth, which could further amplify these dynamics.

Global Liquidity has risen by another 0.92% and is now standing at $132.8T, the highest level since early 2022.

Our RoC remains in a bullish state.

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Improved collateral values and PBoC's actions were the key drivers of this increase.

However, the Fed has yet to deploy a stimulus that would significantly impact the markets.

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China was the "big news" last week, and their stock index has been basically rising in a straight line since the stimulus.

We expect the rest of the world to follow China's pace, and even though their stimulus might not have been enough - more will come.

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This week brings a lot of macro data from the US, including the unemployment rate and NFP. With the Fed having basically "beaten" the inflation, their "official" focus is now on employment.

Markets are currently pricing in a 42% probability of another 50bp rate cut in November, and if the upcoming data comes in lower than expected, the likelihood of a 50bp cut will increase more.

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The ECB is also expected to cut rates this month. While rate cuts are a positive signal that central banks are moving towards easing, they aren't the main driver of risk assets.

Our liquidity index has been rising steadily even without rate cuts, with Bitcoin and Gold (aka main hedges against monetary inflation) closely following it.

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Arguably, we might see some weakness going into October, but the outlook for the rest of the year should be bullish.

Continuation of green areas on our Heatmap signals improved liquidity conditions.

We're seeing a strong upward trend in gold prices.

While many interpret this as a warning, we believe it's pricing in the incoming money-printing.

And which asset is most sensitive to the printer? That's right - Bitcoin, the ultimate risk-on asset, which is already benefiting from the green zones highlighted on our Heatmap.

Expecting to see multiple rate cuts from central banks around the world by the end of '24, it's safe to say exciting times are in front of us.

Based on multiple requests, our team has been working to convert this into an interactive chart, which will soon be available on our website. Stay tuned!