Dollar Liquidity
The aggregate stock of USD funding available to the global financial system — driven by Fed reserves, RRP, the Treasury General Account, and SOMA holdings.
Definition
Dollar liquidity is the net flow of USD reserves into the system. It expands when the Fed grows its balance sheet or the Treasury runs down its TGA; it contracts during QT, TGA refills, and reserve drains.
The most common composite proxy is Net Liquidity = Fed Assets − TGA − RRP, which strips out the components that don't add to bank reserves.
Public research record
Research framework · page evidenceCompleted application: Dollar Liquidity
Dollar liquidity is the dominant macro driver of risk-asset valuations over 3–12 month horizons. Equity multiples track it closely.
| Type | Claim | Scope |
|---|---|---|
| Release fact | The aggregate stock of USD funding available to the global financial system — driven by Fed reserves, RRP, the Treasury General Account, and SOMA holdings. | FX |
| Release fact | 2023: TGA rebuild after the debt-ceiling resolution drained ~$700B of net liquidity, coinciding with the SVB stress and a credit-spread spike. | Published example |
Countercase, invalidators, and sources
The relationship is conditional: another driver can dominate the same asset over the selected horizon.
- · The underlying observation changes materially.
- · The selected asset has no measurable exposure to this mechanism.
Why it matters
Dollar liquidity is the dominant macro driver of risk-asset valuations over 3–12 month horizons. Equity multiples track it closely.
Worked example
2023: TGA rebuild after the debt-ceiling resolution drained ~$700B of net liquidity, coinciding with the SVB stress and a credit-spread spike.