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Get a View on Global Liquidity Volatility with RIMES and CrossBorder Capital

Economic uncertainty caused by the COVID-19 pandemic has made it more important than ever for financial sector firms to monitor global liquidity flows to optimize asset allocation and adjust their systematic trading strategies, and it is an important ingredient of the models aiming to forecast the state of economy.

To ensure clients have access to the most rigorous and timely datasets available, RIMES partners with CrossBorder Capital, a macro research firm that specializes in global liquidity flows. CrossBorder’s flagship Global Liquidity Indexes (GLITM) are available on the RIMES Managed Data Services in a feed-ready format that’s ready for immediate use in operational systems. The GLIs™ are comprised of raw data collected from supranational organizations, such as the IMF, the UN and the BIS; national treasuries and central banks; trade organizations; and major lending corporations.

CrossBorder Capital’s research shows that global liquidity is surging as a result of the COVID-19 crisis. Measured on the GLI™ index, which ranges from 0-100, global liquidity hit 76.9 at the end of March, a 230% increase on the same period last year. Data to be released imminently by the firm shows that the surge has continued through April.

Michael Howell, founder of CrossBorder Capital, commented: “Enormous support from central banks across the world is driving the growth of global liquidity. Our sub-index of World Central Bank Liquidity, a measure of quantitative easing, shot to 63.3 at end-March from 46.7 a month earlier.

“Adding up the various promises made by policy-makers to tackle the Coronavirus crisis, we figure that World Central Bank balance sheets are likely to rise by more than $7 trillion or by around one-third from present levels. If we are right, this will fuel a whopping 40% gain in global liquidity, catapulting it to over $180 trillion in 2020 – more than 200% of World GDP.”

CrossBorder Capital’s research has also revealed an unprecedented rush into safe assets by US investors. The company’s Investors’ Risk Appetite indexes typically range from -50 to +50, and most major economies were skewed around the -50 index mark at the end of March. However, at that point, the US Risk Appetite Index had already surpassed a staggering -80. Michael Howell continued: “this trend confirms the move into cash and money market accounts and shows a heightened preference for safety. US risk markets look primed to bounce-back fast. Daily risk appetite data are available for 20 markets. Latest data show the US currently around -70”.

Constantinos Demetriou, Product Manager at RIMES, added: “the current market conditions are some of the most unpredictable in living memory. Firms need to be armed with the very best data to help them understand volatility and make the right decisions for their business. CrossBorder Capital’s research provides an important window into the major trends around global liquidity flows and is an indispensable part of the RIMES Managed Data Services.”

RIMES Managed Data Services is a proven data operating platform that helps firms of all sizes and in all regions align their data consumption closely with business needs. Contact us to learn more.

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