According to PANews, Nikolaos Panigirtzoglou, a cross-asset market strategist at JPMorgan, analyzed the recent fluctuations in U.S. liquidity or M2 money supply. He said that U.S. liquidity has rebounded in recent months after shrinking in April, but this rebound may be temporary.
Panigirtzoglou pointed out that the decline in the balance of the U.S. Treasury's general account to below $850 billion and the decline in the size of the Federal Reserve's reverse repurchase facility to below $300 billion were temporary boosting factors, and as these factors fade, U.S. liquidity will shrink again.
He expects the Fed's continued quantitative tightening and a modest expansion in U.S. bank lending to lead to a liquidity contraction similar to the liquidity backdrop in 2022.
