Global central bank liquidity. US equities respond to global liquidity, not just the Fed's; Japan and China have been the marginal source.
What to watch: Combined Fed, ECB, BoJ, PBoC balance sheets. It arrives monthly, and the effect typically lasts years.
It sits in tier 2 — Directional: Moves the index for days or weeks. Scheduled data releases, policy decisions, global spillovers, and the prices of money and energy. This is the tier most professional attention is spent on.
Its neighbourhood
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What moves it
Also in Liquidity and market plumbing
- Financial conditions
- Bank reserves and the Fed balance sheet
- Reverse repo facility (RRP)
- Treasury General Account (TGA)
- Repo and money-market rates
- Money market fund assets
- Money supply (M2)
- Emergency lending facilities and discount window
- Treasury market liquidity and basis trades
- Stablecoin demand for Treasury bills
- Treasury buyback programme
- Municipal bond market and tax exemption