Any decline in European liquidity will have a negative impact on Wall Street, the US Treasury market, and US stocks. There’s every indication that liquidity in the European system has not improved as a result of NIRP and QE, and that it will only get worse as the ECB cuts asset purchases.
ECB data on bank deposits for the Eurozone shows total bank deposits down sharply in July, breaking the uptrend in force since the low in 2014. That’s shocking considering that the ECB just boosted its money printing QE programs. Deposits should be rising steadily in concert with the amount of QE, not falling. But cash extinguishment and capital flight are increasing faster than the ECB can print.
The stock and bond rallies went flat in August as heavy Treasury supply created friction for increasing liquidity. There was also evidence that liquidity growth in Europe has stalled. In spite of massive ECB money printing, European bank deposits fell in July. That indicates not just capital flight, but cash extinguishment via loan repayments and…
This post was miscategorized when first published on September 6. I am currently working on the update for September, which will be posted this weekend. There’s no imminent change in the air according to Fed and US banking system indicators, but deposits in Europe fell as the US sucks up capital and cash from the…
Negative interest rate policy (NIRP) elsewhere in the world continues to drive liquidity growth and asset price inflation in US. We saw this trend coming when NIRP was first introduced. Now the question is whether the resulting US asset price inflation was an intended or unintended consequence of foreign central bank policy. Would it even…
The Fed’s balance sheet remains flat but US banking indicators continue to show rapid systemic growth in loans and deposits, and hence, liquidity, as NIRP and waning confidence drive cash out of Europe. This report is part of the Macroliquidity Pro service. An update on macro liquidity indicators will follow later this week.
The Fed’s balance sheet may be flat but US banking indicators show systemic liquidity growing. Capital is flowing out of Europe, fleeing NIRP, and US corporate executives are still funding financial engineering schemes at a breakneck pace.
US macro liquidity grew in June, thanks to the Fed’s purchases of MBS from dealers and to the actions of the ECB and BoJ.
As US banking data continues to exhibit bubble behavior, European banking data reflects a deepening long term crisis of confidence among bankers. These may be harbingers of the endgame for central bank market manipulation.
Macro Liquidity and investor/dealer confidence in the central banks have reached a major inflection point. They are on the cusp of either breaking a yearlong cyclical downturn or rolling over and resuming what could be a secular decline.