Macro Freestyle – 2025 in review: A liquidity-fuelled rally
At a Glance
The desk posits that the liquidity-driven rally in financial markets, as highlighted by Standard Chartered, is likely to persist into 2026, driven by evolving global trade dynamics and the risk of deflation in China. Per the full note source, the analysis suggests that emerging market (EM) assets may benefit from this liquidity environment, potentially leading to reduced cross-asset volatility. The desk underscores the importance of monitoring central bank policies and liquidity conditions as key determinants of market direction. With the consensus target for the EUR/USD at 1.075, the desk's view aligns with expectations of continued strength in the euro against the dollar.
Full Analysis
What the desk is arguing
The desk argues that the liquidity-fueled rally in financial markets, as discussed by Standard Chartered's Eric Robertsen and Madhur Jha, is poised to maintain its momentum into 2026. This outlook is underpinned by the evolving landscape of global trade and the deflationary pressures emerging from China, which could bolster demand for EM assets and stabilize cross-asset volatility.
Supporting this view, Standard Chartered notes that the current liquidity conditions are favorable for risk assets, suggesting that the ongoing influx of capital could sustain market rallies. The firm emphasizes that the interplay between global trade dynamics and monetary policy will be critical in shaping market trajectories.
Where it sits in our coverage
Our consensus target for the EUR/USD stands at 1.075, with a range of 1.04 to 1.12. Notable targets from other firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with the broader consensus, particularly with jpmorgan's target sitting at the upper bound of the range, indicating a bullish sentiment towards the euro relative to the dollar.
How other firms see it
Firms like jpmorgan and citi share a similar bullish outlook on the euro, suggesting a consensus around the potential for continued strength in the currency. Conversely, bofa presents a more cautious stance, advocating for a lower target that reflects concerns over potential economic headwinds.
Key indicators to watch include the trajectory of the EUR/USD and the implications of central bank policies, particularly from the ECB and the Fed, as these will influence market sentiment and positioning.
What the calendar says
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From the original
Standard Chartered’s Eric Robertsen, Global Head of Research and Chief Strategist, and Madhur Jha, Head of Thematic Research, examine whether the liquidity-driven rally in financial markets can sustain its momentum into 2026, how global trade and China’s deflation risk are evolvi
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