Macroliquidity edged to a new high in the past week as the Fed held its regular monthly MBS settlements March 14-22. The markets must now fend without the Fed’s help again until mid April. But they have plenty of liquidity coming from the BoJ and especially the ECB as NIRP drives capital out of Europe and Japan into the US. US bank loan growth also contributes to deposit growth which means increasing liquidity available for the market.
The problem is that sentiment has undergone a slow shift toward greater skepticism of central banks to keep bull markets going, and therefore toward a more cautious and even negative stance on both stocks and bonds.
So far, in spite of the recent rally there’s no sign of a swing back toward the positive. The current upswing is now near the trend limit that marked the last two market peaks. This is an important test of whether the trend toward greater caution is becoming something greater than an intermediate term phenomenon. Is it part of a major cyclical shift, or even a secular shift? Another market downturn from here would lean toward at least the former if not the latter.
The monthly report for MacroLiquidity Investor Monthly subscribers is published around the the turn of the month. Click here for the most recent monthly updates of this report.
Macroliquidity Investor Monthly subscribers, click here to download complete report.
Subscribe to these reports weekly or monthly. Read them for 3 months risk free, with a full money back guarantee..
Not yet a subscriber? Try the Fed Money and Liquidity Pro risk free for 90 days. If, within that time, you find that the information does not meet your expectations, just cancel, request a refund, and your payment will be refunded immediately. Start your risk free subscription now and get instant access.
Liquidity moves markets!
The post Macroliquidity and Sentiment Reach Crucial Juncture was originally published at The Wall Street Examiner. Follow the money!