Global liquidity snapshot

Invesco Global Liquidity
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April 9, 2026
Waves hitting the beach

Key takeaways

  • Highlights:

    The Fed maintained a cautious stance, pushing expectations for rate cuts further out. The BoE kept rates unchanged and the eurozone entered Q1 on fragile footing, as the Iran war–driven energy shock disrupted the policy outlook.

  • Key areas to watch:

    Further US labor market cooling could influence rate expectations. In the UK, policy depends on how the energy shock feeds into inflation and wages. In Europe, policy expectations remain volatile amid Iran war uncertainty and the ECB’s data‑dependent stance.

  • Investment implications:

    Heightened yield volatility supports liquidity and duration flexibility in the US, a tilt to short, laddered and liquid exposures in the UK, and a focus on highly liquid bills and government‑backed securities, and selective high‑quality credit in Europe.

US

US economic conditions remained resilient in the first quarter of 2026 but continued to moderate, as growth slowed from the elevated pace seen in mid-2025. Real GDP expanded at a modest but positive rate exiting last year, supported by steady consumer spending and business investment, avoiding recessionary dynamics. The labor market cooled gradually, with uneven job growth and the unemployment rate drifting into the mid-4% range, though layoffs stayed low and wage growth remained supportive of household incomes.1 Inflation showed limited progress toward the Federal Reserve’s (Fed) 2% target, as earlier improvements reversed late in the quarter amid higher energy prices and still-elevated services inflation. Against this backdrop, the Fed maintained a cautious policy stance, pushing expectations for rate cuts further into the future. Rates volatility increased late in the quarter as escalating geopolitical tensions due to the Iran conflict lifted oil prices and Treasury yields, particularly at the short-and intermediate-end of the curve, reinforcing expectations for a prolonged period of restrictive policy.

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  • 1

    Source: Federal Reserve, as of 04/03/26.

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