Global Liquidity Index (GLI) December 2014 Update

by Michael J. Howell13. December 2014 20:41
Global Liquidity continues to slip lower. According to our evaluation, investment markets remain locked in the late- cycle Speculation regime, with the strong bond markets telling a story in complete agreement with latest weak liquidity readings. The end-November 2014 GLI (Global Liquidity Index) stands at a slightly below neutral level of 44.5 ('normal' range 0-100) and this largely underpinned only by loose US liquidity (67.3). Developed Market liquidity conditions (47.3) are still better than Emerging Markets (33.2), with the far smaller Frontier Markets seeing sharp liquidity falls over recent months. Latest GLI data suggest a need for alertness among investors and some protection, but we reiterate that the liquidity backdrop looks reminiscent of the 1997-98 period, not (yet) 2007-08. The main risk continues to be a still stronger US dollar, which signals an additional Global Liquidity squeeze because of its key cross-border funding role in the World economy.


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