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 has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand</li>
<li>Three factors are dragging Global Liquidity -- the US Fed, the PBoC and the rising MOVE Index</li>
<li>Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end</li>
</ul>



Global Liquidity has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand
Three factors are dragging Global Liquidity -- the US Fed, the PBoC and the rising MOVE Index
Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end


The Liquidity ‘Air Pocket’: A Short Update After US Tax Filing-Week

<ul>
<li>The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining</li>
<li>Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky</li>
<li>Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets</li>
</ul>


The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining
Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky
Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets


What Really Matters Is Global Liquidity...But It Looks Set to Zag Before It Zigs Higher

<ul>
<li>January 2024 another strong month for Global Liquidity which hits US$171.7 trillion</li>
<li>US Fed and China’s PBoC are in the forefront of adding liquidity</li>
<li>Global Liquidity Cycle trough in October 2022. Next peak late-2025</li>
</ul>


January 2024 another strong month for Global Liquidity which hits US$171.7 trillion
US Fed and China’s PBoC are in the forefront of adding liquidity
Global Liquidity Cycle trough in October 2022. Next peak late-2025


Where Are We In the Global Liquidity Cycle?

<ul>
<li>'Stealth QE’ from the US Fed set to continue, but US Treasury is the ‘back seat driver’</li>
<li>Treasury wrestling to cap near-term coupon supply to avoid rising yields, but Fed willing to let regional banks’ liquidity levels rise</li>
<li>Rising public debt is the major bogey: pushed up by demographics and monetized by Fed and Treasury. 10-year yields will re-test 5¼%</li>
</ul>


'Stealth QE’ from the US Fed set to continue, but US Treasury is the ‘back seat driver’
Treasury wrestling to cap near-term coupon supply to avoid rising yields, but Fed willing to let regional banks’ liquidity levels rise
Rising public debt is the major bogey: pushed up by demographics and monetized by Fed and Treasury. 10-year yields will re-test 5¼%


A ‘Back Seat’ Bond Yield Driver: US Treasury Is Forcing The Fed To End QT. US Yields To Re-Test 5¼%?

<ul>
<li>US Treasury yields have resumed their uptrends and look set to retest 5%
</li>
<li>
US Fed Liquidity continues to expand, following a 13% increase in 2023</li>
<li>This is a ‘normal’ investment cycle for equities, credit and the economy, but it has been abnormal for bonds</li>
</ul>


US Treasury yields have resumed their uptrends and look set to retest 5%


US Fed Liquidity continues to expand, following a 13% increase in 2023
This is a ‘normal’ investment cycle for equities, credit and the economy, but it has been abnormal for bonds


Rising Liquidity And The Threat of 5% US Bond Yields

CrossBorder Capital an investment advisory firm specialising in macro-investing. Founded in 1996 with an international client base, CrossBorder focuses on monitoring and understanding global liquidity and capital flows. Our proprietary databases (available to clients) cover 80 countries in depth from 1980 onwards. We take a systematic quantitative methodology that uses this data with AI models to predict financial market movements. The efficacy of our data has been independently verified, and we have an associated but separate asset management division.