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US TSYS

Repo Reference Rates

EUR

EURUSD is through session low

SOY TECHS

(H2) Corrective Cycle

US TSY OPTIONS

BLOCKs, March 10Y Put Spds

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  • Investors' concern over equities' valuation has been rising in recent weeks as DM central banks preparing for tapering/hiking rates.
  • In the past 18 months, the significant increase in global liquidity has been one of the main drivers of the spectacular recovery in global equities, and especially the US growth stocks.
  • The chart below shows how the mega-cap growth stocks (represented by the FANG+ index) have been strongly co-moving with global liquidity, which we compute as the total assets of the G4 central banks (Fed, ECB, BoJ, PBoC), in the past 5 years.
  • Hence, momentum on risky assets could start to fade as Fed starts to tightening policy; investors are now pricing up to 4 rate hikes for this year.
  • Can growth stocks continue to reach new highs 'without liquidity'?

Source: Bloomberg/MNI