Preparing For 2027 Inflection in Global Liquidity | Michael Howell’s Bull Case For Bonds and Tepid View of Liquidity-Sensitive Assets

Global liquidity is currently in a downward cycle, having peaked in late 2025, which signals a shift from speculative market conditions toward a period of turbulence. This contraction is driven by a massive debt refinancing wall and the capital-intensive nature of the AI buildout, which consumes rather than produces liquidity. While the Federal Reserve and Treasury are attempting to maintain stability through repo market management and "Treasury QE"—issuing shorter-term debt to cap volatility—underlying economic growth is crowding out financial market liquidity. Consequently, long-duration government bonds offer defensive value as the economy faces a projected slowdown in 2027. Meanwhile, Bitcoin and gold remain highly sensitive to these liquidity shifts, with gold specifically influenced by domestic money printing in China to manage its own significant debt burden.