Global Liquidity Monitor: Launch Edition
US dollar liquidity has accelerated in 2026, coinciding with the Fed's shift from tightening to balance-sheet stabilization -- the first installment of an ongoing monitor, honestly scoped to what the platform's data supports today
This is the first installment of an ongoing Global Liquidity Monitor. It is launched under that name deliberately, but scoped honestly: the platform's current data supports a genuine US dollar liquidity read, not yet a truly global one. Two distinct signals are worth tracking together. First, US M2 money supply has clearly accelerated through the first five months of 2026, after a full year of steadier growth -- a shift that coincides directly with the Federal Reserve's December 2025 decision to end quantitative tightening and begin stabilizing its balance sheet around an 'ample reserves' level. Second, the BIS credit-to-GDP gap has been gradually narrowing throughout 2025, moving from -12.59 percentage points in January to -11.54 in October, meaning credit growth has been slowly closing the gap with trend growth even while remaining below it. Neither signal alone would be conclusive; read together, they describe a liquidity environment that is genuinely loosening, gradually, from a below-trend starting point.
Key Takeaways
- US M2 money supply rose from $21,095.3bn in July 2024 to $23,052.3bn in May 2026, with the pace of expansion changing materially in 2026.
- Monthly M2 increases through 2025 typically ran $60-100bn; by May 2026, the single-month increase reached $247.8bn, the largest in the window examined.
- This acceleration coincides directly with the Federal Reserve's December 2025 end of quantitative tightening -- a genuine, evidenced coincidence in timing, not yet a proven causal claim.
- The BIS credit-to-GDP gap for the US narrowed consistently through 2025, from -12.59 percentage points in January to -11.54 in October, across four consecutive quarterly readings.
- Both signals point in the same direction -- gradually loosening liquidity conditions -- without either individually describing a dramatic shift.
Evidence Base
M2 data is drawn from the Federal Reserve via FRED, monthly, single-sourced. The BIS credit-to-GDP gap is drawn directly from the Bank for International Settlements' own published series via the platform's canonical data, quarterly, with a reporting lag reflected in the October 2025 reading being the most recent available as of this writing.
US M2 Money Supply
Reading the Two Signals Together
Money supply and credit growth measure genuinely different things -- M2 reflects the stock of money in the economy, while the credit-to-GDP gap reflects the pace of credit expansion relative to trend -- and it would overstate the evidence to claim they mechanically drive one another. What can be said directly from the data: both are currently moving in the same direction, and the M2 acceleration's timing lines up with a specific, identifiable policy event (the Fed's own December 2025 framework shift) rather than appearing as an unexplained trend break.
BIS Credit-to-GDP Gap, United States
What Could Be Wrong
This edition's biggest limitation is scope, not method: two US-only series cannot support a genuinely 'global' liquidity read, and this piece does not claim to provide one. Within the US-only scope, the M2/QT-timing connection is a coincidence in timing that this piece finds genuinely suggestive, not a causal claim the current evidence proves.
Implications
Sources
- Federal Reserve, via lucabindi.com canonical data — Federal Reserve
- Bank for International Settlements, via lucabindi.com canonical data — BIS
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