August 5, 2025 — Global markets are flush with liquidity, but this golden period may be nearing its end, warns Michael Howell, founder and CEO of Crossborder Capital. In a recent interview on the Thoughtful Money podcast, Howell sounded the alarm on what he sees as an approaching storm: a $40 trillion wave of debt refinancing set to strain markets starting in early 2026.
What’s Driving the Liquidity Surge?
According to Howell, global liquidity is currently at its highest level since the COVID-19 crisis. This expansion is fueled by:
- Drawdowns from the U.S. Treasury General Account (TGA)
- Easing policies from foreign central banks
- China’s massive economic stimulus efforts
In the U.S., the Federal Reserve is quietly injecting liquidity through what Howell terms “not QE/QE” — including short-dated Treasury issuance, reverse repo facility drawdowns, and bank funding programs.
But Howell warns this liquidity cycle is temporary:
“Liquidity will likely peak by early 2026, and what comes next could be very disruptive.”
Why It Matters: $40 Trillion in Debt Maturity
The core of Howell’s warning centers around a $40 trillion debt wall that includes government, corporate, and household obligations. Much of this debt was issued during the zero-interest rate period of the pandemic and is scheduled to mature between 2026 and 2028.
Refinancing that debt in a potentially higher-rate environment, or amid tightening liquidity, could trigger serious financial strain, Howell cautions. This, in turn, may drive up volatility in equity and bond markets and reintroduce repo market stress, similar to disruptions seen in late 2019.
Market Outlook: Bright Short-Term, Stormy Long-Term
Despite his long-term caution, Howell remains bullish in the near term, forecasting:
- Continued outperformance in tech stocks
- A coming rally in commodities and small-cap equities
- Rising monetary inflation, prompting hedging strategies
To prepare, Howell recommends investors focus on hedging assets such as:
- Gold
- Bitcoin (BTC)
- High-quality equities
- Real estate
He draws parallels between the current cycle and the post-Plaza Accord era of the 1980s, noting that while inflation and asset prices surged then, the cycle ended abruptly with the 1987 stock market crash.
What to Watch: Treasury Yields and Repo Market Stress
Howell advises investors to monitor 10-year U.S. Treasury yields and the repo markets closely. A sharp rise in yields or repo stress could signal the onset of liquidity strain — and potentially the end of the current market cycle.
Bottom Line:
While markets may continue to benefit from abundant liquidity through 2025, the convergence of maturing debt and potential central bank divergence could spark a critical turning point in global finance by 2026.
