Monetary Matters with Jack Farley The Speculation Phase Begins | Michael Howell on Liquidity Cycle, China, Fiscal Dominance, and Dollar Weakening
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Aug 3, 2025 
Michael Howell, an economist from Crossborder Capital specializing in global liquidity, shares his insights on the current liquidity cycle. He discusses how a weakening U.S. Dollar is prompting global monetary easing, particularly from China's central bank. Howell also details the shift from monetary to fiscal dominance in bond markets and warns against risks as the economic cycle evolves. He highlights the cyclical nature of liquidity and its implications for asset allocation, predicting a bullish backdrop for financial markets through 2026.
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Weaker Dollar Spurs Global Easing
- The weakening U.S. dollar has enabled many central banks globally to ease monetary policy.
- China has injected significant liquidity, adding nearly $1.5 trillion in the past six months, boosting global liquidity.
Bond Market Integrity Is Vital
- The integrity of bond markets, especially collateral quality, is critical for global liquidity.
- Rising international inflation and volatile bond markets, as seen in the late 1980s, could trigger market crashes.
US Treasury Premium Rises Internationally
- Rising US Treasury term premium is driven more by international inflation and investor concerns than by US domestic factors.
- US Treasury market remains the safest compared to foreign bonds, despite rising yields globally.
