WEEKLY GLOBAL LIQUIDITY UPDATE
Global Liquidity increased to US$196.30 trillion in the latest data.
- The 3-month annualised growth rate picked up to 4.5%
- 12-month growth increased to 6.3%
Latest data show that headline liquidity has reached a new high of US$196.30 trillion, while underlying liquidity, measured by the Shadow Monetary Base, has fallen to US$107.71 trillion, the lowest level in 16 months. Favourable funding conditions continue to support headline liquidity growth, with the collateral multiplier rising to a new record high of 1.82.
The gap between strong headline liquidity and weak underlying liquidity has therefore widened further. We note, however, that bond market volatility, as measured by the MOVE Index, has picked up in recent days. This warrants close monitoring, as sustained higher volatility would likely increase collateral haircuts, reduce the collateral multiplier, and potentially weaken liquidity conditions.
Global Liquidity (US$ Trillions)
- Latest level: US$196.30T
(↑ from US$196.18T last week; ↑ from US$195.75T two weeks ago) - 12-month growth: 6.3%
(↑ from 6.1% last week; ↑ from 5.9% two weeks ago) - 3-month annualised growth: 4.5%
(↑ from 4.3% last week; ↑ from 3.2% two weeks ago)
Interpretation Headline liquidity rose to a fresh high of US$196.30T. Annual growth strengthened to 6.3%, while the 3-month annualised growth rate accelerated further to 4.5%. The improvement in both annual and short-term growth rates suggests that liquidity conditions remain supportive.
Shadow Monetary Base (SMB)
- Latest level: US$107.71T
(↓ from US$108.79T last week; ↓ from US$109.36T two weeks ago) - 12-month growth: -1.4%
(↓ from -0.7% last week; ↓ from -0.1% two weeks ago) - 3-month annualised growth: -7.9%
(↓ from -4.0% last week; ↓ from -1.4% two weeks ago)
Interpretation SMB declined to US$107.71T. Annual growth (medium-term momentum) weakened to -1.4%, indicating that underlying liquidity creation has stalled. The 3-month annualised growth rate deteriorated further to -7.9% from -4.0% the previous week, highlighting a marked near-term weakening in underlying liquidity conditions.
Collateral Multiplier & Volatility Mechanism Volatility ↓ → Haircuts ↓ → Multiplier ↑ → Liquidity ↑
- Latest multiplier: 1.82
(↑ from 1.80 last week; ↑ from 1.79 two weeks ago)
Interpretation The collateral multiplier increased to 1.82 from 1.80 in the prior week. The rise indicates stronger support from collateral dynamics, helping to offset weakness in the underlying Shadow Monetary Base and contributing to continued growth in headline liquidity.
Key Takeaways
- Global Liquidity rose to a new high of US$196.30T, up from US$196.18T the previous week.
- 3-month annualised growth accelerated to 4.5% from 4.3%.
- 12-month growth increased to 6.3% from 6.1%.
- SMB annual growth weakened to -1.4%.
- SMB short-term growth deteriorated to -7.9% from -4.0%, showing that underlying liquidity conditions continue to weaken
- The collateral multiplier increased to a record high of 1.82 from 1.80, underscoring the critical role that favourable collateral dynamics continue to play in supporting global liquidity conditions