Global Liquidity Update

Another recorded decrease in global liquidity.

Our RoC calculation is also not showing any signs of a positive trend yet.

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Several components have led to this, with the main one being the Reverse Repo Program (RRP), which has absorbed an additional $243B in liquidity.

This also explains the Federal Reserve's net liquidity decline over the past two weeks.

We're not yet in a positive liquidity regime.  

However, with the RRP at $664B and the TGA at $765B, you should prepare for a wild ride once Yellen and Powell decide to drain these liquidity pools.

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Added Text:

Right around when our team published the weekly update for global liquidity, the RRP reported a $212B drop and is now sitting at $451B.

It appears that banks are moving funds they had parked for end-of-quarter reporting back into the market.

With 67 counterparties withdrawing funds, it's the largest outflow since January 2nd.

Banks are now using the reserves they built up for the end of the quarter, temporarily boosting market liquidity.

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