Bridgewater Associates examines how the unwind of global liquidity is likely to expose vulnerabilities across equity markets, with a particular focus on the US. The paper argues that a decade of easy money pushed equity duration to extremes and left parts of the market structurally dependent on liquidity, raising downside risks as conditions tighten.
Who Will Prove Most Vulnerable To The Pullback In Liquidity?
Bridgewater
Erin Miles, Jason Cheal
Research
10 Pages
Key Takeaways
US Liquidity Exposure Surge: The share of US equities highly sensitive to liquidity has risen to nearly 60%, while growth-sensitive exposure has declined meaningfully over recent decades.
Equity Duration Elevated Levels: US equity duration has climbed to around 13–14 years, matching levels last seen during the late 1990s tech bubble period.
Buybacks And Financing Dependence: About 30% of US companies rely heavily on buybacks, while roughly 6% remain cash flow negative and dependent on external funding.
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