We’ve argued that understanding the dynamics of total global #liquidity is more important than merely focusing on central bank #rate moves, yet when it comes to both rates and liquidity measures, global central banks have made an important pivot toward #PragmaticEquilibrium.
Indeed, we estimate the peak-to-trough contraction in our measure of total global #liquidity was about $1.6 trillion over a span of nearly 20 months, and that corresponded to a flattening in the U.S. #Treasury curve and growing anxiety about growth prospects.
However, we estimate that between now and the end of 2020, the @federalreserve will inject near another $350 billion, the #ECB another $250 billion, and should global FX reserve growth remain steady as it has, it will represent another $350 billion in liquidity growth.
All told, our estimates suggest that we’re looking at nearly an incremental $950 billion in total global #liquidity growth over the next 14 months, which is quite a pivot to our mind, and it is likely to become even more so should the PBOC and #BOJ come to the party as well.
That said, in our latest @blackrock blog, we argue that in contrast to the past decade of monetary policy lifting all #economic boats at once – the years ahead are likely to be characterized by great dispersion between #economies, industries and #markets: bit.ly/2OEiyFs
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