Fed net liquidity, calculated as Fed assets minus the Treasury General Account (TGA) and reverse repurchase agreements (RRPs), helps shows the availability of liquidity in the U.S. financial system.

Higher Fed net liquidity indicates more funds circulating in financial markets, supporting higher asset prices and improved market stability. Conversely, lower net liquidity implies tighter financial conditions, potentially leading to decreased asset prices and increased market volatility. Monitoring net liquidity helps investors gauge the Federal Reserve's influence on financial market conditions. Therefore, changes in Fed net liquidity can significantly impact overall market liquidity.

The Fed Liquidity Oscillator, calculated as Δ% SP500 – Δ% Net Liquidity, typically signals overbought levels for the SP500 at readings of 8% and higher, and oversold levels at -8% and lower. For example, if the SP500 is +5% over the past month and net liquidity is -3% over the past month, the oscillator would be +8%, indicating an overbought signal.

Although the oscillator is shown for month-over-month, two-week-over-week, and week-over-week, it’s recommended to focus on month-over-month since lower timeframe oscillators are noisier and less actionable.

Other Deposit Liabilities (ODL) refer to a category of U.S. bank deposits that include various types of non-demand deposit accounts, not classified as standard checking or savings accounts. These can include time deposits (CDs), money market accounts, individual retirement accounts (IRAs), and foreign currency deposits. ODL is a subset of the M2 money supply and comprises about 80% of M2 according to Federal Reserve data. M2 money supply is a key measure of monetary liquidity but is reported monthly with a significant lag, whereas ODL is reported weekly, providing a more timely indication of changes in monetary liquidity and potential price signals for risk assets.