What is liquidity 
and why is it important?

The GLI™ predict movements in international fixed income, equity, credit, currency, futures and options markets. They typically lead business cycles by around 12-15 months and financial asset prices by 3-6 months. Economists, analysts, strategists and portfolio managers in banks, asset management firms, hedge funds and corporate treasury departments all need to watch these data. Data are published in a timely fashion, typically within 10 days of each month-end and give a very early indication of business and credit conditions at that point in time.

GLI™ headline data are designed to provide snapshots of financial and credit conditions and are lead indicators of future economic activity. Data are comprehensive, covering liquidity conditions across all 80 key economies in the developed, emerging and frontier market universe. The monthly GLI™ data have two levels: (1) the headline global and national GLI™ release is designed to provide an overview of financial liquidity conditions at each month end; (2) sub-component data detail the key Central Bank, private sector and foreign flow building blocks. The GLI™ indices are homogeneous in both content and methodology. They are based on reported data or facts, and not on forecasts or opinions. They are expressed both as normalised data in local currency terms and in US dollar value terms, and thus offer unique cross-market comparisons. Our database typically starts for most economies in 1974.

Traffic light warning systems and data heat maps visually display alerts to clients. We monitor and separately publish data on three key risk channels: (1) liquidity risk; (2) forex risk and (3) market exposure risk. These are combined into a Composite Risk Index, which is published, within 10 days of each month-end. To assess risk, the firm tracks capital flows, watches Central Banks and digs into credit markets. The methodology derives from a comprehensive study of flow of funds data and incorporates our belief is that changes in the sources of funds (i.e. financial flows) are often more important than the uses of funds (i.e. economic spending categories). This is true by definition at major inflections in the funding cycle, which we measure through our monthly GLI™ (Global Liquidity Indexes). These indexes comprise measures of Central Bank, Private Sector and net cross-border capital flows: we sample more than 30 data series for each of 80 economies World-wide, covering banks, Central Banks, shadow banks, corporations, households and foreign investors to unambiguously assess liquidity conditions.