MSCI U.S. vs. G10 Excess Liquidity Leading Indicator G10 excess liquidity is rolling over again, and while not yet negative, it is already pointing to a tougher backdrop for U.S. equities in the months ahead. When liquidity fades, equity markets rarely stay smooth for long. Image: Bloomberg
S&P 500 and Liquidity Liquidity stays abundant. But since 2022, dip-buyers have stopped tracking liquidity and started trading on Fed whispers, reading signals more than balance sheets. Image: Real Investment Advice
S&P 500 and Liquidity Index Improving liquidity is setting a friendlier tone for U.S. equities, helped by the Fed’s shift in balance sheet policy. The biggest shake-up could come once Trump’s new Fed chief runs the show. Image: TS Lombard
Global Liquidity and MSCI EM Global liquidity rebounds have historically supported emerging market equities by boosting capital inflows, growth, and asset prices. Image: J.P. Morgan
S&P 500 vs. Liquidity Index A slowdown in liquidity growth—particularly if combined with soft economic data—poses a short-term risk to the U.S. equity market, increasing volatility and the likelihood of price declines. Image: TS Lombard
S&P 500 E-Mini Futures (ES1) Liquidity Thinning liquidity in financial markets exacerbates downside risks by increasing the likelihood of abrupt and severe price movements, particularly during economic or geopolitical shocks. Image: Deutsche Bank Asset Allocation
Global M2 Liquidity The increase in global M2 money supply suggests that liquidity is on the rise, which is likely to stimulate economic activity and push equity markets higher. Image: Morgan Stanley Research
S&P 500 – Change in Liquidity Will the support given to U.S. equities through the increase in net liquidity since March 2023 persist until the end of the year? Image: Morgan Stanley Research
Liquidity Policies and Central Bank Balance Sheets Central banks have barely decreased the amount of QE stock, suggesting a deliberate and measured strategy in scaling back economic support. Image: BofA Global Investment Strategy
Valuation – S&P 500 PE vs. Liquidity Deteriorating liquidity may be a significant headwind for the S&P 500. Image: Longview Economics
S&P 500 Total Return vs. USD Liquidity Proxy The U.S. liquidity outlook will be a headwind for U.S. stocks in the coming quarters. Image: Steno Research