Michael Howell, founder & CEO of Crossborder Capital, has warned that global liquidity will peak by early 2026, after which markets may face turbulence due to $40 trillion in debt refinancing needs across government, corporate, and household sectors.
What Happened: In an interview on the Thoughtful Money podcast, Howell stated that global markets are at the highest liquidity levels since COVID, driven by factors like U.S. Treasury General Account drawdowns, foreign central bank easing, and China's massive stimulus.
The Federal Reserve is injecting liquidity through mechanisms Howell calls “not QE/QE” — short-dated Treasury issuance, reverse repo drawdowns, and bank funding programs.
This will peak by early 2026 before facing major strain.
A looming $40 trillion debt refinancing wave across all sectors, driven by zero-interest COVID-era debt maturing between 2026 and 2028, could trigger a significant liquidity crunch and market volatility.
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Why It Matters: Howell compares today's cycle to the 1980s post-Plaza Accord era, noting a similar pattern of monetary easing and asset performance.
He expects continued equity outperformance in the near term, led by tech, followed by gains in commodities and small caps.
As monetary inflation rises, he recommends hedging with assets like gold, Bitcoin BTC/USD, quality equities, and real estate.
He warns the cycle may end abruptly, similar to the 1987 crash, if central bank policies diverge or bond market stress resurfaces. 10-year Treasury yields, and repo market stress are the warning signs that Howell suggests taking note of.
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