Monetary Matters with Jack Farley Michael Howell: Markets On “Nervous Knife-Edge Equilibrium" As Global Liquidity Momentum Has Peaked
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Mar 9, 2026 
Michael Howell, founder of CrossBorderCapital and creator of the Global Liquidity Indexes, studies macro liquidity cycles. He explains why global liquidity momentum peaked and why markets sit on a nervous knife-edge. He highlights China-driven gold gains, late-cycle opportunities in Chinese tech and commodities, and why Bitcoin acts like a liquidity canary. He urges a defensive tilt as liquidity tightens.
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Liquidity Index Tracks A 65 Month Refinancing Cycle
- The Global Liquidity Index measures momentum (rate of change) across banks, shadow banks, repo markets and cross-border flows, not simple money-supply aggregates.
- Howell finds a ~65 month cycle (~5–6 years) tied to average debt maturities that explains the liquidity sine wave.
A Strong Economy Can Hurt Financial Markets
- Strong real economies can be a headwind for financial markets because they absorb liquidity from financial markets into working capital and capex.
- Howell notes US growth can pull liquidity away from Wall Street into Main Street, pressuring asset prices despite healthy GDP.
Term Premium Signals Yield Curve Flattening Risk
- Term premium co-moves with liquidity: rising liquidity tends to lift term premium and steepen yield curves, while falling liquidity lowers term premium and flattens curves.
- Howell expects term premium to inflect down and possibly go negative by mid-2026, implying yield curve flattening risk.
