Ark Invest: Liquidity is recovering, which may lay the foundation for a market rebound by the end of the year.

[Ark Invest: Liquidity is Recovering, Possibly Laying the Foundation for a Year-End Market Rebound] On November 27, Ark Invest stated that U.S. market liquidity, which reached a multi-year low of $5.56 trillion on October 30, has finally begun to recover. A six-week government shutdown resulted in a loss of $621 billion in liquidity, but with the government reopening, $70 billion has flowed back into the market. It is expected that in the next 5-6 weeks, as the Treasury's general account normalizes, another $300 billion will return. The improvement in the liquidity environment coincides with the Fed's shift to a dovish stance. New York Fed President John Williams, California Governor Waller, and San Francisco Fed President Daly have all expressed support for interest rate cuts, raising the market's implied probability of a near-term rate cut to about 90%. Ark Invest believes that as liquidity recovers, quantitative tightening (QT) will end on December 1, and monetary policy will turn supportive, indicating that the market is forming conditions that could potentially reverse the recent downward trend.