GlossaryGlobal Liquidity
Global Liquidity
Global Liquidity adds up the balance sheets of the Fed, the ECB and the Bank of Japan in trillions of US dollars, for the Fed minus the two large outflows, the Treasury General Account and Reverse Repo. It measures central bank money, the base on which banks and markets build credit, and sits as a line over the price. Many traders compare Bitcoin and stocks against exactly this curve.
How to read it
- Over months and quarters, not days. When the aggregate rises, central banks are expanding liquidity on balance, which is seen as a tailwind for risk assets. When it falls, liquidity is being withdrawn.
- Compare the shape: If the price moves with the line, the market is following liquidity. If it rises while the line falls, it lacks this tailwind.
- The US outflows count: In 2022 and 2023, the TGA and Reverse Repo took amounts of more than two trillion US dollars out of the system and put them back. That was barely visible in the Fed's total assets alone, but it is in this curve.
- Exchange rates play a part: If the US dollar weakens, the ECB and BoJ shares rise in dollar terms without any central bank having done anything. So part of every move is the forex market.
Good to know
- The People's Bank of China and the Bank of England are not included. Together they make up about a fifth of the world total, so the curve covers about four fifths.
- This is central bank money, not a money supply. The Global Liquidity Index (US approximation), by contrast, calculates the US M2 money supply plus the Fed's balance sheet, without the outflows.
- The balance sheets appear weekly or monthly with a delay. So the right edge can be a few days to weeks behind today.
- No settings apart from the style. Intended for 1D to 1W, the preset is 1W.