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But the essence of the argument is that lower bond volatility ups the amount of cash liquidity flowing around world markets, and vice versa. But it is the incremental movement in this giant pool that arguably matters most for stock markets and asset prices. Even though global liquidity is shrinking as you might expect in the face of rising Western interest rates, central bank balance sheet reduction and a higher dollar, other offsets are significant. But falling bond volatility has likely played a big part in softening the blow too. "The two together have helped overall liquidity conditions - but we are mindful that bond markets are likely to remain volatile and need to be monitored carefully."

Persons: CrossBorder, Mike Dolan, Matthew Lewis Organizations: Federal Reserve, coy, Treasury, Fed, Bank, People's Bank of, New York Fed, Reuters Graphics, Reuters, Thomson Locations: Treasuries, punchbowl, People's Bank of China, United States

For some, the answer to exuberant markets lies in the ample cash still sloshing around the financial system. Total global liquidity, a measure of cash and credit in the world economy, has risen to almost $170 trillion in June, Crossborder calculates, from $158 trillion in October. Central banks have added a net $1.7 trillion into money markets since November, it also estimates, a move that correlates with a risk-taking trend. But an alternative scenario is that U.S. money market funds, stuffed with cash after depositors fled regional banks in March, buy enough newly issued Treasuries to keep rates stable. "Liquidity is not a force that reverberates immediately into financial markets," said JPMorgan global market strategist Nikolaos Panigirtzoglou.

Persons: Michael Howell, Crossborder, Richard Clarida, Georgina Taylor, Ken Taubes, reverberates, Nikolaos Panigirtzoglou, Morgan Stanley, Luca Paolini, Paolini, Naomi Rovnick, Harry Robertson, Dhara Ranasinghe, Kirsten Donovan Organizations: U.S . Treasury, Federal Reserve, European Central Bank, Crossborder Capital, U.S, Reuters, BNP, JPMorgan, Apple, Thomson Locations: Japan, U.S

If this continues, liquidity from Japan will continue to support global markets," he adds. The BOJ flow in January outstripped the combined liquidity drain from the Fed, European Central Bank and Bank of England, resulting in a G4 net liquidity provision of $115.3 billion. Operations from the ECB and, most notably, the PBOC, have helped pour around $1 trillion of liquidity into the global financial system in recent months. As Citi's King says, when changes in even the least significant line items on central bank balance sheets are measured in the hundreds of billions of dollars, "they should command investors' respect." Related columns:- U.S. debt ceiling saga softens Fed's QT- Bank of Japan shock raises 2023 global liquidity risksBy Jamie McGeever; Editing by Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

☆ Good quality corporate debt and gold are where you want to be next year, analyst says
▼ + stars: | 2022-12-21 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailGood quality corporate debt and gold are where you want to be next year, analyst saysMichael Howell, CEO of CrossBorder Capital, says the U.S. Federal Reserve may pivot in liquidity before it does in interest rates.

☆ Investors should look to 'good quality corporate debt and gold' in 2023, strategist says
▼ + stars: | 2022-12-21 | by ( Elliot Smith | ) www.cnbc.com time to read: +2 min

Brendan McDermid | ReutersLONDON — As fundamentals hold up and tight financial conditions weigh on stock markets, corporate debt and gold could be strong investment options in 2023, according to Michael Howell, managing director at CrossBorder Capital. A slowing economy, tightening financial conditions and rising yields might typically prompt greater stress in the corporate debt markets and a higher rate of delinquencies. So, this time, corporate debt markets are actually in a reasonably good shape, so that is an area that I would suggest is not a bad area for 2023." "The economy didn't turn until the end of 2001...the corporate debt market picked up prior to that, around about Q2, Q3 [second, third quarter] of 2001. "Where you want to be positioned next year is good quality corporate debt and gold."

The IMF, the U.S. Treasury Secretary and the world's biggest bond fund all chipped in with their views on China on Wednesday, although what investors really want to hear is word from Beijing. As analysts at CrossBorder Capital note, economic momentum in China is slowing again, while investors' risk appetite remains near 2020 pandemic lows. chartThe IMF suggests there is scope for a further "gradual, safe recalibration" of Beijing's zero-COVID policy. U.S. Treasury Secretary Janet Yellen said China's zero-COVID policy was a threat to healing global supply chain difficulties, but said she would not give Beijing advice on managing the pandemic. Another whoosh in global markets - Wall Street's three main indices soared 2%-4% on Powell's comments on Wednesday - won't do any harm either.

Societe Generale's contrarian strategist Albert Edwards said Britain's reawakening of the fabled 'bond vigilantes' would "reverberate around financial markets for years to come." And many read across to ebbing liquidity in U.S. Treasury markets for a take on Fed parameters this time around too. Bank of America's October survey of global fund managers, released on Tuesday, certainly backs that up. Register now for FREE unlimited access to Reuters.com Registerby Mike Dolan, Twitter: @reutersMikeD. Charts by Bank of America, Vincent Flasseur and Lewis Krauskopf; Editing by Josie KaoOur Standards: The Thomson Reuters Trust Principles.

☆ The pound rallies from a 2-week low after the Bank of England reportedly signals it's ready to keep buying bonds
▼ + stars: | 2022-10-12 | by ( Karen Friar | ) www.businessinsider.com time to read: +3 min

The pound is rising after a FT report the Bank of England said it may extend its emergency bond buying. The UK currency fell after the BoE chief told pension funds they had three days to sort out their investments. The bond buying aims to calm markets spooked by fears of a UK financial crisis and a hit to pension funds. On Wednesday, the Financial Times reported the Bank of England had signaled privately to several bankers that it could extend its bond buying past the deadline. Analysts said Bailey's giving pension funds just days to sort out their liquidity positions had sent new jitters through the market.

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