The liquidity outlook is about to turn much worse

The banking stress continues among regional banks and the liquidity outlook is now worsening materially in USD and EUR, which is likely to emphasize the issues.

Hi everyone and welcome to our monthly update on the upcoming Macro Regime based on liquidity, inflation, and growth models for each of the large economies.

We plan on expanding the series to include a regular on each of EUR, CNY, JPY, USD, INR and GBP liquidity – including liquidity indicators in our datahub, but more on that once we are ready to reveal it all.

We have updated our models and found that liquidity, inflation and growth are likely to dwindle simultaneously in May/June. We move from a QE (light/like) environment to the down, down, down the macro regime, which will likely carry repercussions for your portfolio construction.

You can now back-test each of the macro regimes and see the best-performing assets in every environment in our very own datahub.

Please have a look!

Chart 1: The Macro Regime will likely change for the worse in May/June

This month, we have decided to elaborate on the liquidity parameter since it is the one changing direction from April. We see a relatively sharp increase in the probability of tighter liquidity conditions ahead in May/June, but the timing is a tad tricky to grasp since it depends on political decisions in Congress (and potentially from central banks as well).

Try us out for free 14 days to gain access to our liquidity outlook in EUR, USD, JPY and CNY at this link.