The Capital Allocator’s Guide to Global Net Liquidity

In a world governed by central bank interventions, "Asset Price Inflation" is often just another name for "Net Liquidity Expansion."

What is Net Liquidity?

We define Global Net Liquidity as the Federal Reserve's balance sheet minus the Treasury General Account (TGA) and the Reverse Repo Facility (RRP). This represents the actual spendable liquidity available to prime dealers and commercial banks.

The Z-Score Regime

Our 25-year pipeline allows us to calculate Z-scores for current liquidity levels. Historical analysis shows that institutional risk-on regimes coincide with Net Liquidity Z-scores above +1.

Why Forward Guidance is Noise

While central bank officials focus on interest rate "forward guidance," the actual liquidity plumbing (TGA replenishment, RRP drainage) provides the high-frequency reality that dictates asset movement.

Source: FRED, GraphiQuestor Liquidity Engine.