🟢 [E3884] The US dollar weakened against all major currencies last week, boosting global liquidity levels. Key cross-rates show broad USD weakness: US$1.37/£ (vs 2025 high of US$1.22/£), US$1.19/€ (vs 2025 high of US$1.02/€), ¥153/US$ (vs ¥158/US$ high), and RMB6.90/US$ (vs RMB7.35/US$ high). Howell emphasizes that a weak dollar is positive for global liquidity conditions.

🟢 [E3899] The collateral multiplier, which is highly sensitive to bond market volatility, is benefiting from lower volatility. The MOVE index has trended lower since its April 2025 peak of 137.3 and remains close to 4-year lows at 68. Lower bond volatility reduces haircuts on collateral, boosting the multiplier and supporting liquidity expansion.

🟢 [E3905] Investor positioning shows clear regional divergence. Emerging Markets are strongly risk-on (+61), particularly Korea (+71) and China (+47). Developed Markets are risk-on (+14) mainly due to Japan (+69). US positions are slipping towards risk-off (-7), while UK (+12) and Eurozone (+5) are trending lower. Within EZ, France is notably risk-off (-25) while Germany (+18) and Italy (+11) are risk-on.

🟢 [E3891] Global investor risk appetite is broadly risk-on (+31) but exposure is slipping. US positions are notably approaching risk-off territory at -7, while UK and Eurozone positioning continues to soften. This suggests rotation away from developed market risk exposure despite still-positive global readings.

🟢 [E3888] Risk asset performance follows liquidity with a 3-month lag. Q4 2025 saw further loss of momentum in global liquidity growth, making the investing environment more challenging. This is evident in current flat-lining global aggregates (MSCI World Index) and volatile US risk asset markets in Q1 2026.

🟢 [E3889] Gold showed relative strength throughout 2025, hitting new highs in Q4 even as risk assets lost momentum. Gold prices showed strength throughout Q1 2025 despite Q4 2024 liquidity slowdown, and the 1H liquidity expansion helped gold build on gains. Gold started 2026 well driven by PBoC liquidity but has recently faltered in a widespread market rout.

🟢 [E3890] Gold started 2026 well specifically driven by PBoC liquidity, according to Howell. The PBoC's pre-Lunar New Year injections that boosted global liquidity had a direct positive effect on gold prices before the broader market rout. This supports the thesis that Chinese liquidity flows preferentially to gold.

🟢 [E3883] Howell's framework posits that changes in liquidity frequently lead changes in risk asset prices with a roughly three-month lag. Increases in global liquidity tend to be followed by positive performance in risk assets, while decreases tend to precede periods of weaker risk asset performance. This transmission mechanism is central to his investment framework.

🟢 [E3887] The Shadow Monetary Base (SMB), comprising Central Bank liquidity and collateral (bonds), is identified as the 'bedrock' of liquidity growth. At US$112.1 trillion with 9.1% 3m annualized growth, the SMB acceleration was driven primarily by PBoC injections, firmer collateral values, and US dollar weakness — the core transmission mechanisms of the liquidity cycle.

🟢 [E3881] PBoC liquidity injections ahead of Lunar New Year were the primary driver of the liquidity expansion, combined with improved US Fed liquidity. This Chinese stimulus was the main catalyst for the pickup in short-term momentum, demonstrating the PBoC's outsized influence on global liquidity conditions.

🟢 [E3892] Investor risk appetite readings show global positioning remains risk-on at +31 but exposure is slipping. Holdings are skewed towards Emerging Markets (+61), with continued bias towards Asia — particularly Korea (+71) and China (+47). This regional divergence reflects differential liquidity conditions across major central banks.

🟢 [E3880] Global Liquidity hit a new all-time high of US$188.8 trillion last week. Short-term momentum improved significantly with the 3-month annualized growth rate rising to 3.6%, while annual growth remains strong at 8.7%. The Shadow Monetary Base (SMB) rose to US$112.1 trillion with 3m annualized growth jumping to 9.1%. Key drivers were PBoC injections, firmer collateral values, and USD weakness.

🟡 [E3882] Cross-currents remain despite record liquidity. Bank of Japan QT and sluggish ECB/BoE liquidity continue to constrain growth. The annual 8.7% growth rate partly reflects weak year-ago comparisons rather than pure expansion strength. These offsetting forces make the liquidity trajectory less certain than the headline suggests.

💬 [E3894] Howell introduces a crypto basket correlation chart (BES$) composed of 60% BTC, 40% ETH, and 10% Solana, showing tight correlation with Global Liquidity advanced 3 months. This positions Solana as part of the institutional crypto tracking framework alongside Bitcoin and Ethereum.

🟢 [E3886] Howell presents a tight correlation chart between Global Liquidity (advanced 3 months) and a crypto basket (BES$: 60% BTC, 40% ETH, 10% Solana). Bitcoin mirrored broader risk assets in 2025 with weakness in Q1, recovery in Q2, new record highs in Q3, then faltering in Q4 tracking the liquidity cycle with a lag.

🟢 [E3885] Howell explicitly links Bitcoin's Q1 2026 rout to the loss of momentum in global (specifically US) liquidity growth through Q4 2025. Bitcoin prices faltered in Q4 reflecting slower liquidity expansion in Q3, and the further deterioration through Q4 has led to the current Bitcoin price collapse. This validates the ~3-month liquidity-to-crypto transmission lag.

🟢 [E3893] Investor flows favor Emerging Asia with China at +47 risk-on reading, reflecting continued bias towards the region. Strong PBoC liquidity injections (ahead of Lunar New Year) were a primary driver of global liquidity expansion, supporting the regional allocation preference.