Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>
 Global Liquidity Cycle bottomed last October. Noticeable acceleration, particularly in US dollar terms at near 30% annualized clip</li>
<li>
 China and Japan are the key Central Banks leading the charge. Yet, even the US Fed is stirring, with net liquidity injections seeming targeting stable bank reserve levels</li>
<li>Financial markets have already felt this liquidity boost, particularly liquidity-sensitive instruments like tech shares, gold and Bitcoin. The World economy too is stirring 
</li>
</ul>



 Global Liquidity Cycle bottomed last October. Noticeable acceleration, particularly in US dollar terms at near 30% annualized clip

 China and Japan are the key Central Banks leading the charge. Yet, even the US Fed is stirring, with net liquidity injections seeming targeting stable bank reserve levels
Financial markets have already felt this liquidity boost, particularly liquidity-sensitive instruments like tech shares, gold and Bitcoin. The World economy too is stirring 



<ul>
<li>2023 will prove far better for most investors. Although the major World stock and bond indexes will range sideways, several national markets and sectors will perform strongly</li>
<li>Behind our optimism is an expansion the all-important Global Liquidity cycle from last October. This is driven by the People’s Bank of China and paced by the US Federal Reserve</li>
<li>World fixed income markets are exhibiting a ‘normal’, not the distorted cycle many claim. Coming months should see skidding bond market volatility and the beginning of yield curve steepening</li>
</ul>


2023 will prove far better for most investors. Although the major World stock and bond indexes will range sideways, several national markets and sectors will perform strongly
Behind our optimism is an expansion the all-important Global Liquidity cycle from last October. This is driven by the People’s Bank of China and paced by the US Federal Reserve
World fixed income markets are exhibiting a ‘normal’, not the distorted cycle many claim. Coming months should see skidding bond market volatility and the beginning of yield curve steepening


The Most Important Question For Equity Investors: What to Expect in Global Fixed Income in 2023?

<ul>
<li>US QT will soon melt away into a ‘stealth QE’ under pressure from illiquidity in key financial markets. QT is effectively already dead
</li>
<li>Recent experiences by the UK (September) and Japanese (December) Monetary Authorities evidence poor sovereign debt market liquidity 
</li>
<li>Lesson is that QE and QT are not symmetric policies: QE is easier to engage than to disengage via QT. This likely puts a floor under Global Liquidity in 2023</li>
</ul>


US QT will soon melt away into a ‘stealth QE’ under pressure from illiquidity in key financial markets. QT is effectively already dead

Recent experiences by the UK (September) and Japanese (December) Monetary Authorities evidence poor sovereign debt market liquidity 

Lesson is that QE and QT are not symmetric policies: QE is easier to engage than to disengage via QT. This likely puts a floor under Global Liquidity in 2023


Is QT Already Dead? Can The Fed Really ‘Ease’ Liquidity And Still ‘Tighten’?

<ul>
<li>
 Global debt projected to test US$315 trillion (ex-financials) in 2023, or 312% of World GDP. Too much debt increases financial fragility</li>
<li>
 Financial dominance driving a return to Central Bank QE. Global Liquidity will reverse its recent fall and rebound to US$174 trillion</li>
<li>More liquidity is consistent with a future stabilization and moderate gains in World asset markets. Gold looks to be a winner 
</li>
</ul>



 Global debt projected to test US$315 trillion (ex-financials) in 2023, or 312% of World GDP. Too much debt increases financial fragility

 Financial dominance driving a return to Central Bank QE. Global Liquidity will reverse its recent fall and rebound to US$174 trillion
More liquidity is consistent with a future stabilization and moderate gains in World asset markets. Gold looks to be a winner 



<ul>
<li>Markets are often driven by liquidity. 2022 has seen a collapse in Global Liquidity, but there are signs that the cycle could turn higher in 2023?</li>
<li>We evidence 5 reasons for optimism, including positive signs from the US Fed and China's PBoC; a US$ peak and rising market depth in the US Treasury market</li>
<li>We expect interest rates to stay higher for longer, but predict liquidity will be reinjected. It is not ‘Risk On’ yet, but it may be the end of ‘Risk Off’ 
</li>
</ul>


Markets are often driven by liquidity. 2022 has seen a collapse in Global Liquidity, but there are signs that the cycle could turn higher in 2023?
We evidence 5 reasons for optimism, including positive signs from the US Fed and China's PBoC; a US$ peak and rising market depth in the US Treasury market
We expect interest rates to stay higher for longer, but predict liquidity will be reinjected. It is not ‘Risk On’ yet, but it may be the end of ‘Risk Off’ 



United States

The MSCI World Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31, 1969. MXWO includes developed world markets, and does not include emerging markets. MXWD includes both emerging and developed markets.

MSCI World Index (MXWO INDEX)

Liquidity, Liquidity, Liquidity ….

Global Liquidity cycle bottomed last October. Latest weekly data show major Central Banks’ aggregate liquidity measured in US dollar terms has...

Michael J. Howell

The Most Important Question For Equity Investors: What to Expect in Global Fixed Income in 2023?

World fixed income markets give their cue to World stocks. Rising Global Liquidity will support bonds in 2023. This augurs well for certain...

Michael J. Howell

Is QT Already Dead? Can The Fed Really ‘Ease’ Liquidity And Still ‘Tighten’?

US QT will soon melt away into a ‘stealth QE’ under pressure from illiquidity in key financial markets. QT is effectively already dead. This puts a...

Michael J. Howell

Is QE Returning By Stealth in 2023?

Global Liquidity is set to test US$174 trillion in 2023, after falling sharply in early 2022. China is already easing and the US Fed may be...

Michael J. Howell

Five Reasons For Optimism In 2023?

We evidence 5 reasons for optimism in 2023. Interest rates could stay higher for longer, but we predict liquidity will be reinjected. It is not...

Michael J. Howell