Our headline Fathom Liquidity measure (FLiq), has seen a significant rebound this year courtesy of sharp u-turns on rate hikes from both Fed Chairman Powell and ECB President Draghi. This has provided a much-needed boost to markets after the heavy 2018 Q4 sell-off. However, we note that market liquidity has recovered only to broadly neutral levels since the end of January 2019. More importantly, the fixed income sub-component to the FLiq, available to our clients, continues to signal challenging levels of liquidity in this market segment. We believe market liquidity, particularly in fixed income, needs to improve from current levels if the euphoric market sentiment is to persist.
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