Liquidity Is Likely To Stay Starved As The ‘Higher Rates For Longer’ Reality Settles In, By Jeffrey O'Connor, Head Of Market Structure, Americas, At Liquidnet

“Every year the market expects a return to normalcy when we hit September, yet it rarely happens.  Overall U.S. market volumes last week were some of the weakest of the past two years. This is not surprising given heavy vacation schedules at the end of August, but very often it takes 1-2 weeks for the market to settle into the homestretch personality. 

“Liquidity is likely to stay starved as the ‘higher rates for longer’ reality settles in and traditional money managers continue to contemplate when and where to deploy capital, while cash level readings remain persistently high. The Federal Reserve has specifically called for data-driven direction, and the closest major event would be the CPI on September 13. Rarely is it a “rush out of the gates” scenario post Labor Day, but it feels particularly poignant this year.”