End february liquidity (money and credit flow) data now available
The latest liquidity (money and credit flow) data is now available. The overall picture is still one of sub par growth, suggesting global growth will continue to be subdued at best. The somewhat surprising new trend is that the Federal Reserve and the Bank of England have both started a significant new QE, up 30% and 55% on an annualised basis respectively over the last three months. Is the Fed worried, as our colleagues at CrossBorder are, that Trump's politics will lead to stagflation in the US, and combining a rate rise with this? Or will the '100% certainty' rate rise not happen? With BREXIT coming up, the UK is easier to understand. The skew of money and credit creation in the US is heavily away from the private sector, which usually indicates a weak dollar. It's all counter-consensus, but that is where the data is pointing. The better news is from Emerging Markets, where the Chinese economy continues to recover steadily and the PBoC policy remains accommodative. We'd say that Emerging Markets, perhaps not China itself, are where the opportunities lie today.
Click on the GLI Update icon on the Liquidity page for more details.