US Liquidity Indicator Turns Negative for First Time Since 2021
A key leading indicator of U.S. liquidity has turned negative for the first time since 2021, signaling tighter financial conditions that may weigh on equities.
The Excess Liquidity Index has fallen below zero for the first time since 2021, according to a widely followed macro indicator. This shift reflects a deterioration in U.S. liquidity conditions driven by a hawkish Federal Reserve and tighter financial markets.
The index had remained positive through much of 2022 and 2023, but the latest reading warns of a potential headwind for risk assets. Historically, such moves have preceded periods of weakness in equities.
Source: First Squawk