Waiting For Clarity From the Nov. 30 Powell Speech

Fresh Assault on SPX 3,630 Bull/Bear Line

Hawkish Fed Faces New Challenge as US Treasury Examines Ways to Improve Market Liquidity

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

Multiple Countries / Cross Asset Strategy

<ul>
<li>US Fed has injected a positive US$167bn into markets so far in Q4, 2022. This partly reverses the US$1.1 trillion they withdrew in year up to September</li>
<li>Based on US Fed projections of a further US$1.5-2 trillion of QT liquidity withdrawals, the S&amp;P500 could skid lower to 3200 (i.e. minus 20% from here)</li>
<li>QT has stalled, showing the operational difficulty of withdrawing cash.  This may also reflect underlying concerns about US Treasury market liquidity. A pause/ pivot is coming, but its not now</li>
</ul>


US Fed has injected a positive US$167bn into markets so far in Q4, 2022. This partly reverses the US$1.1 trillion they withdrew in year up to September
Based on US Fed projections of a further US$1.5-2 trillion of QT liquidity withdrawals, the S&amp;P500 could skid lower to 3200 (i.e. minus 20% from here)
QT has stalled, showing the operational difficulty of withdrawing cash.  This may also reflect underlying concerns about US Treasury market liquidity. A pause/ pivot is coming, but its not now


Has The US Fed Already Paused Its QT and 'Pivoted'?