Global Liquidity Index: A New Cycle May Be Coming

Cross Border Capital has presented a fascinating chart of the Global Liquidity Index, which appears to follow a natural sinusoidal wave pattern — almost like a rhythm the markets are bound to move within. The black line in the chart represents the Liquidity Index, while the red dots overlay a benchmark sinusoidal pattern to illustrate how liquidity ebbs and flows in long cycles.

Historically, these liquidity waves have appeared in predictable intervals — from the early ’90s, the dot-com bubble in 2000, the pre-GFC years of 2006–2008, and most recently, the massive liquidity injection in 2020 during COVID-19.

If this wave pattern continues, the chart suggests we may be approaching another major liquidity upcycle in the coming years. This could be driven by several factors:

• A global crisis or slowdown, which often prompts central banks to inject liquidity.
• The U.S. facing challenges due to its tariff-led policies, which could lead to monetary easing.
• A potential lowering of interest rates, which the U.S. may attempt if inflation comes under control.

What this means is — markets may see another surge, but it might be preceded by a crisis, just as we’ve seen in the past. Liquidity injections often follow periods of stress, not just as a bonus, but as a lifeline to revive market confidence.

So whether it’s triggered by geopolitical tensions, a financial shock, or a shift in U.S. policy — the signs point to a possible large-scale liquidity cycle unfolding ahead.

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