Darius Dale

Macro strategist and analyst at 42 Macro.

Claims

As speaker

Mentioned in

Key positions and views

Global liquidity is contracting severely due to a strong U.S. dollar and rising real yields, creating significant headwinds for asset markets.

The next financial crisis is most likely to originate in the unregulated, non-bank financial sector, which is highly exposed to dollar-funding stress and lacks official backstops.

The U.S. is headed for a recession, but on a delayed timeline, likely starting between November 2023 and April 2024.

The Federal Reserve is hamstrung by persistent underlying inflation, making it unable to pivot towards easier policy until a significant market or economic event forces its hand.

Structurally, long-term U.S. Treasury yields should be much higher, in the 6-7% range, due to factors like low term premia and fiscal dynamics.

Podcast consensus on Dale

Points of consensus

▶Dale consistently argues that the strong U.S. dollar, driven by U.S. economic outperformance, is a primary cause of tightening global liquidity.Apr 2026

▶He maintains that the Federal Reserve is constrained by persistent underlying inflation, which prevents it from reversing the ongoing liquidity drain to support asset markets.Apr 2026

▶A core tenet of his analysis is that the greatest risk for a financial crisis resides in the unregulated, non-bank financial sector, which lacks access to official liquidity backstops.Apr 2026

▶He views the global macroeconomic landscape as one of U.S. outperformance, contrasting it with major European economies that he asserts are already in a mild recession.Apr 2026

Points of debate

▶Dale predicts the DXY will break its 2022 highs, but adds the caveat that a rapid rise could force Fed intervention first, creating a conditional forecast with an internal point of tension.Apr 2026

▶There is a potential conflict between his near-term forecast for a U.S. recession (which typically lowers bond yields) and his long-term structural view that 10-year Treasury yields should be significantly higher, between 6% and 7%.Apr 2026

▶He dismisses the likelihood of a coordinated currency intervention like the Plaza Accord but believes economic intervention due to a sovereign debt crisis is probable, creating a nuanced debate on the *type* of official response to expect.Apr 2026

▶While presenting a significant and immediate liquidity drain of $1.8-$2 trillion over three months, his formal recession forecast calls for a start no earlier than November 2023, creating a potential debate about the lag between severe liquidity tightening and economic contraction.Apr 2026

Key themes

▶The Global Liquidity SqueezeApr 2026

Dale's central thesis is that global liquidity is contracting at a significant rate, driven by a strengthening U.S. dollar, rising real yields, and increasing FX volatility. He quantifies this drain at approximately $1.8 to $2 trillion over the last three months, with the negative impulse persisting for six consecutive months.

For investors, this theme suggests a sustained headwind for risk assets, as the fundamental pool of capital available for investment is shrinking, increasing the probability of market dislocations.

▶U.S. Dollar Dominance and Its ConsequencesApr 2026

He posits that U.S. economic outperformance relative to Europe and China is fueling a powerful U.S. dollar rally. This dynamic creates a vicious cycle, as the strong dollar tightens global financial conditions, particularly for the $13-$15 trillion in global dollar-denominated debt, half of which is held by entities without organic access to dollars.

This highlights a critical vulnerability in the global financial system, where U.S. domestic policy and economic strength can export instability to the rest of the world through the dollar channel.

▶Policy Constraints and Crisis RiskApr 2026

Dale argues the Federal Reserve is trapped, unable to ease policy due to stubborn underlying inflation that remains well above its 2% target. This policy paralysis exacerbates the liquidity drain and shifts the primary crisis risk to the unregulated non-bank financial sector, which lacks access to emergency lending facilities.

Analysts should focus on stress indicators in private credit, hedge funds, and other non-bank entities, as these are the areas Dale identifies as the most likely epicenter of the next financial crisis.

▶Divergent Global Growth and Monetary PathsApr 2026

Dale paints a picture of stark divergence among major economies, with the U.S. outperforming, Europe in a mild recession, and Japan as a unique outlier with above-trend growth and inflation. He suggests that a potential policy tightening by the Bank of Japan could have significant spillover effects, pushing U.S. Treasury yields toward 5.25%.

This divergence complicates global macro investing, suggesting that country-specific factors, particularly Japan's monetary policy, are becoming critical drivers of global bond yields and capital flows.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

November 2022

Authored the 42 Macro recession forecast, projecting a U.S. recession would not begin until at least November 2023.

End of July 2023

Identifies this as the starting point for a sustained, multi-week increase in the value of the U.S. dollar.

Last 6 months (relative to podcast)

States that the global liquidity impulse, a key macro indicator, has been negative for this entire period.

Last 3 months (relative to podcast)

Quantifies a significant acceleration in the liquidity drain, with an estimated $1.8 to $2 trillion lost on a momentum basis.

Last month (relative to podcast)

Notes a sharp 50 basis point increase in the real 10-year TIPS yield, which he describes as causing 'real damage' to liquidity in asset markets.

Suggested prompts

How does the 42 Macro Global Liquidity Proxy historically correlate with asset market performance, and what does its current negative impulse imply for specific asset classes? &nearr;What specific entities or markets within the unregulated non-bank financial sector are most vulnerable to the liquidity drain and dollar-funding stress Dale describes? &nearr;Under what specific conditions would the Federal Reserve abandon its inflation fight to intervene in asset markets, as hinted at in Dale's conditional DXY forecast? &nearr;How does Dale's long-term Treasury yield forecast of 6-7% reconcile with his more immediate U.S. recession call, which would typically lead to lower yields? &nearr;

Key concepts

Global Liquidity 1 ep U.S. Dollar 1 ep Recession Forecasting 1 ep Federal Reserve Policy 1 ep Treasury Yields 1 ep Financial Crisis Risk 1 ep Non-Bank Financial Sector 1 ep International Economics 1 ep Inflation 1 ep Bank of Japan 1 ep

Notable quotes

“The Federal Reserve is unlikely to reverse the current liquidity drain because underlying inflation measures like trim mean CPI and super core PCE are stuck at levels 100-150 basis points above the Fed's 2% target.”

Darius Dale · What’s Driving Global Liquidity? With Darius Dale

“The kind of intervention I think is more likely to happen in this scenario is economic intervention. On the other side of what happens when you pull this liquidity rug from out underneath these major economies, you might start to actually see something that looks like a real true sovereign debt crisis in more core sovereign debt markets.”

Darius Dale · What’s Driving Global Liquidity? With Darius Dale

“And about half of all that is created by entities that have no organic access to dollars. You know, it's like Japanese banks or European hedge funds or, you know, Brazilian, you know, pension funds, something like that.”

Darius Dale · What’s Driving Global Liquidity? With Darius Dale

“We have several models and a lot of empirical studies that tell you that bond yields should be somewhere close to 6% to 7% on the tenure.”

Darius Dale · What’s Driving Global Liquidity? With Darius Dale

Report last updated: Apr 21, 2026

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