GLOBAL M2 LIQUIDITY & CREDIT — WEEKLY MEMO
Week Ending 2026-07-31
The US drain peaked and the rebuild ended in the same week: the TGA jumped +$135.0B to $970.4B, pulling net liquidity down ~$128.6B and bank reserves -$120.4B to $2.945T -- below $3T for the first time this cycle -- but at Treasury's guided ~$1T target the mechanical drain is now largely spent. The FOMC held at 3.50%-3.75% with three dissents FOR a hike; the 2Y rallied -10bp to 4.23% while the 30Y rose +5bp. Equities recovered (S&P +1.1%, Nasdaq +1.6%) as BTC fell -1.9% and gold -0.3%. Broad money kept expanding with broader participation: euro area M3 accelerated to +3.3% YoY and UK M4ex to +5.0%.
GMLCI Score
+18.25
Mild global liquidity support
Global M2 Momentum
+50
Broad money trend
USD-Adjusted M2
+20
FX-adjusted research proxy
Central Bank Liquidity
-10
Fed / ECB / BOJ / PBOC / BOE
Credit Impulse
+5
Quantity, breadth, pricing
Funding / Dollar
+0
HY OAS 2.84%
Risk Transmission
+0
BTC -1.9% wk
Gold (XAU/USD)
$4,043
-0.3% weekly
Executive Conclusion
Supportive
- US M2 5.5% YoY (2026-06); Euro area M3 3.3% YoY (2026-06).
- China M2 CNY 356.71T, 8.0% YoY (2026-06).
- US HY spreads at 2.84% with a 5bp weekly move.
Restrictive
- No new PBOC release this week (next due mid-August); June data still governs: M2 +8.0% YoY, M1 +4.0%, TSF stock 462.06T CNY (+7.4% YoY), and H1 social financing of 20.84T CNY running 2.02T below last year.
- Broad USD index moved 0.0% over the weekly window.
- BTC changed -1.9% and gold -0.3% over the week.
Main Warning
- Bank reserves are below $3T and the SOFR-IORB cushion has closed to exactly 0bp for three consecutive sessions -- SOFR is at the administered floor, not through it, so this is a compressed cushion rather than funding stress, but the distinction stops being academic at this reserve level. US bank credit also reversed, -$21.7B on the week to July 22 (C&I -$2.1B), giving back part of the prior week's +$96.8B.
POSITIVE GMLCI +18.25 — Mild global liquidity support.
GMLCI — Global M2 Liquidity & Credit Index
GMLCI = 0.30 x Global M2 Momentum + 0.20 x USD-Adjusted M2 + 0.15 x Central Bank Liquidity + 0.15 x Credit Impulse + 0.10 x Funding/Dollar Stress + 0.10 x Risk Transmission
| Component | Weight | Score | Contribution |
|---|---|---|---|
| Global M2 Momentum | 30% | +50 | +15.00 |
| USD-Adjusted M2 | 20% | +20 | +4.00 |
| Central Bank Liquidity | 15% | -10 | -1.50 |
| Credit Impulse | 15% | +5 | +0.75 |
| Funding / Dollar Stress | 10% | +0 | +0.00 |
| Risk Transmission | 10% | +0 | +0.00 |
| Metric | Value |
|---|---|
| Weekly GMLCI | +18.25 |
| 4-week moving average | +20.38 |
| 13-week moving average | +17.52 · 1 of 13 reconstructed (4-week MA is fully live) |
GMLCI history (release-aware)
| Week | GMLCI | Global M2 | USD-Adj | Credit | Read |
|---|---|---|---|---|---|
| 2026-07-31 | +18.25 | +50 | +20 | +5 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-07-24 | +21.25 | +50 | +20 | +10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-07-17 | +18.25 | +50 | +20 | +5 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-07-10 | +23.75 | +50 | +20 | +5 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-07-03 | +25.25 | +50 | +20 | +10 | MILD GLOBAL LIQUIDITY SUPPORT |
Show 54 earlier entries
| Week | GMLCI | Global M2 | USD-Adj | Credit | Read |
|---|---|---|---|---|---|
| 2026-06-26 | +12.00 | +50 | +20 | +10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-06-19 | +22.00 | +50 | +20 | +10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-06-12 | +8.50 | +50 | +10 | -20 | NEUTRAL / MIXED |
| 2026-06-05 | +14.50 | +50 | +40 | -10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-05-29 | +22.50 | +60 | +30 | -10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-05-22 | +11.00 | +50 | +10 | -20 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-05-15 | +23.00 | +50 | +20 | +10 | MILD GLOBAL LIQUIDITY SUPPORT |
| 2026-05-08 | +7.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-05-01 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-04-24 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-04-17 | +7.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-04-10 | +7.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-04-03 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-03-27 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-03-20 | -7.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-03-13 | -6.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-03-06 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-02-27 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-02-20 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-02-13 | -0.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-02-06 | -14.00 | +0 | +0 | +0 | MILD GLOBAL LIQUIDITY DRAG |
| 2026-01-30 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-01-23 | -0.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-01-16 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-01-09 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2026-01-02 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-12-26 | +7.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-12-19 | -7.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-12-12 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-12-05 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-11-28 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-11-21 | -10.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-11-14 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-11-07 | -10.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-10-31 | +5.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-10-24 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-10-17 | -10.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-10-10 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-10-03 | +2.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-09-26 | -6.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-09-19 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-09-12 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-09-05 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-08-29 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-08-22 | -6.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-08-15 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-08-08 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-08-01 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-07-25 | +5.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-07-18 | -3.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-07-11 | +2.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-07-04 | +7.50 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-06-27 | +5.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
| 2025-06-20 | +0.00 | +0 | +0 | +0 | NEUTRAL / MIXED |
Each weekly score uses only releases public by that week ending; history is not rewritten when later data arrives. The gauge ranks only the FRED-derived 20% market tier — Funding/Dollar Stress plus Risk Transmission — versus frozen 2020+ history. The four judgment components are outside this lens; the full GMLCI is not percentile-ranked.
Market-Stress Alert
| Alert | Status | Notes |
|---|---|---|
| Market-Stress percentile (20% tier) | NEUTRAL | Market-Stress (20% tier) = +0.00 ranks in the 52nd percentile of weeks since 2020 (N=155). This ranks only Funding/Dollar Stress and Risk Transmission; the full GMLCI is not percentile-ranked. |
Global Liquidity Dashboard
Broad money (release-aware)
| Bloc | Level | Growth | Reference Month | Read |
|---|---|---|---|---|
| US M2 | $23.16T | 5.5% YoY | 2026-06 | POSITIVE |
| Euro area M3 | — | 3.3% YoY | 2026-06 | POSITIVE |
| China M2 | CNY 356.71T | 8.0% YoY | 2026-06 | POSITIVE |
| Japan M2 | JPY 1296.4T | 2.2% YoY | 2026-06 | POSITIVE |
| UK M4ex | — | 5.0% YoY / £14.6B flow MoM | 2026-06 | NEUTRAL |
Market transmission (weekly)
| Series | Latest | Weekly Change | As Of | Read |
|---|---|---|---|---|
| Broad USD index | 120.71 | 0.0% | 2026-07-24 | NEUTRAL |
| US HY OAS | 2.84% | 5bp | 2026-07-30 | NEUTRAL |
| S&P 500 | 7,489.72 | 1.1% | 2026-07-31 | POSITIVE |
| Nasdaq Composite | 25,373.85 | 1.6% | 2026-07-31 | POSITIVE |
| Bitcoin | $62,887 | -1.9% | 2026-07-31 | NEGATIVE |
| Gold (XAU/USD) | $4,042.67 | -0.3% | 2026-07-31 | NEGATIVE |
Monthly releases are carried forward until a new official release is public. Market series use the latest observation available by the report week. Funding/Dollar Stress and Risk Transmission scores are FRED-derived from the market inputs shown above. Gold is a tracked confirmation layer, not an independently scored GMLCI component.
Central Bank Liquidity
| Central Bank | Latest Input | Read | Notes |
|---|---|---|---|
| Federal Reserve | US URLI memo (companion report) | NEUTRAL | See the US memo for reserves, TGA, RRP, and net-liquidity plumbing. |
| ECB | EUR 5,944.0B / -5.1B wk | NEGATIVE | Policy-purpose securities changed -10.2B (statement 2026-07-24). |
| BOJ | M2 2.2% YoY | POSITIVE | Money-stock reference month: 2026-06. |
| PBOC | M2 8.0% YoY | NEUTRAL | No new PBOC release this week (next due mid-August); June data still governs: M2 +8.0% YoY, M1 +4.0%, TSF stock 462.06T CNY (+7.4% YoY), and H1 social financing of 20.84T CNY running 2.02T below last year. |
| BOE | M4ex 5.0% YoY | NEUTRAL | Reference month: 2026-06. |
Global Credit Map
| Credit Layer | Latest | Read | Notes |
|---|---|---|---|
| US bank credit (H.8) | $19,719.4B / -21.7B wk | NEGATIVE | Released 2026-07-31; observation covers 2026-07-22. |
| C&I loans | $2,884.7B / -2.1B | NEUTRAL | Business-credit channel. |
| Real-estate loans | $5,815.8B / +5.0B | POSITIVE | Credit-breadth channel. |
| Consumer loans | $1,908.4B / +0.9B | POSITIVE | Household channel. |
| China TSF / RMB loans | Release-aware read | NEUTRAL | No new PBOC release this week (next due mid-August); June data still governs: M2 +8.0% YoY, M1 +4.0%, TSF stock 462.06T CNY (+7.4% YoY), and H1 social financing of 20.84T CNY running 2.02T below last year. |
| BIS cross-border / FX credit | Quarterly context layer | NEUTRAL | BIS total credit and Global Liquidity Indicators; not a weekly datapoint. |
| Credit pricing | HY OAS 2.84% (5bp) | NEUTRAL | Market-pricing confirmation layer. |
NEUTRAL Credit is scored as a layered transmission check, not a single headline datapoint.
Next Week Watchlist
Scheduled / probable focus
- The August 5 Quarterly Refunding Statement is the decisive item: a TGA target above ~$1T or larger coupon sizes restarts the drain from an already-thin reserve base, while an unchanged target confirms the July rebuild was the whole of it. Also watch whether SOFR-IORB turns positive, whether the discount window ($6.6B, largest weekly rise this cycle but still negligible) stays quiet, and the August 7 payrolls print.
- Monitor broad USD, HY spreads, and gold for confirmation or invalidation.
- Compare the companion URLI memo: global money can stay supportive while US plumbing drains risk liquidity.
Bull / Base / Bear Scenarios
| Scenario | Setup | Market Impact | Confirms / Invalidates |
|---|---|---|---|
| BULL | USD-adjusted M2 strengthens; China credit broadens; HY spreads stay tight. | Supports equities, EM, BTC, high beta. | Confirms: GMLCI > +40. Invalidates: USD spike or spread widening. |
| BASE | Broad money grows but credit transmission stays mixed. | Selective risk support. | Confirms: GMLCI +10 to +39. Invalidates: China credit weakens further. |
| BEAR | USD-adjusted M2 contracts; credit and funding stress worsen. | Risk-off, high-beta pressure. | Confirms: GMLCI < -40. Invalidates: USD weakens and credit broadens. |
Sources & Data Definitions
| Field | Source | Type |
|---|---|---|
| US M2 | Federal Reserve H.6 / FRED M2SL | Official |
| Euro M3 / loans | ECB monetary developments | Official |
| ECB balance sheet | ECB weekly financial statement | Official |
| China M2 / TSF | PBOC releases | Official |
| Japan M2 | BOJ money stock | Official |
| UK M4ex | BOE money and credit | Official |
| US bank credit | Federal Reserve H.8 | Official |
| USD / HY / equities / BTC | FRED DTWEXBGS, BAMLH0A0HYM2, SP500, NASDAQCOM, CBBTCUSD | Market |
| Gold spot | Public XAU/USD spot snapshots | Market (secondary) |
| Cross-border credit | BIS Global Liquidity Indicators | Official (quarterly) |
Funding/Dollar Stress and Risk Transmission are FRED-derived at week creation. Global M2 Momentum, USD-Adjusted M2, Central Bank Liquidity, and Credit Impulse remain documented research/judgment components until complete keyless feeds are available.