Axiom Liquidity Research · Pillar II — Liquidity

US10Y ÷ DXY
The Global Liquidity Barometer

Liquidity Signal
What the ratio measures

The ratio relates the cost of the US benchmark sovereign debt (US10Y) to the relative strength of the dollar as the world's reserve currency (DXY).

The absolute value is not what matters — it is the relative direction of each component. The signal reveals whether global liquidity is expanding healthily or contracting under dollar scarcity.

Within the Axiom Liquidity Framework, this signal anchors the Liquidity Layer and must be cross-referenced with the Equity Risk Premium to confirm positioning.

Ratio = US10Y (%) / DXY
US10Y — 10-year Treasury yield (benchmark cost of capital)
DXY — Dollar index vs. 6 major currencies (global collateral strength)
US10Y ↑
DXY ↓
10Y↑ DXY↓ Risk-On Expansionary Healthy global liquidity. Capital flows into risk assets.
10Y↑ DXY↑ Monetary Shock Aggressive Fed tightening. Valuation multiples under pressure.
10Y↓ DXY↓ Reflation / QE Dovish Fed + weak dollar. Gold and commodities favoured.
10Y↓ DXY↑ Dollar Shortage Risk-Off Flight to safety. The dollar cannibalises all asset classes.
DXY ↑
US10Y ↓
Framework · US10Y/DXY Liquidity Signal · 2026
Axiom Liquidity axiomliquidity.net  ·  01 / 02
Axiom Liquidity Research · Decision Matrix

Scenarios, Signals & Allocation

Axiom Framework
Scenario Risk State Liquidity Effect Axiom Layer MRM Allocation
10Y↑  DXY↓Risk-On Expansionary Risk-On Capital exits safe havens. Liquidity expanding globally. Credit spreads compress. QE / Rates Rising
Beta + Alpha		 Cyclical equities, commodities, real assets. Reduce cash.
10Y↓  DXY↑Dollar Shortage Risk-Off Extreme flight to USD liquidity. Dollar appreciates against everything. Credit contracts. QT / Rates Falling
Anchor Only		 Cash, T-Bills, physical Gold. Minimise equities and duration.
10Y↑  DXY↑Monetary Shock Caution Aggressive Fed tightening. Discount rate rises. Valuation multiples compress. QT / Rates Rising
Anchor Reduced		 Reduce duration. TIPS. Avoid growth and long-duration assets.
10Y↓  DXY↓Reflation / QE Risk-On Dovish Fed + weak dollar. Artificial liquidity. Favours real assets and EM. QE / Rates Falling
Beta + Alpha		 Gold, emerging markets, commodities. Value over Growth.
Alert Triggers — Liquidity Layer × Equity Risk Premium
Critical Trigger — Exit Signal
ERP < 1% + 10Y↓ DXY↑
Ratio in free fall combined with a near-zero equity premium — equities no longer compensate for risk vs risk-free. Exit Beta and Alpha positions immediately.
Watch Trigger — Cycle at Risk
Initial Claims > 300k
Classic historical threshold for labour market deterioration. Precedes yield decline and potential Dollar Shortage if DXY reacts to the upside.
Axiom Liquidity Research · Monetary Matrix Framework · 2026
Axiom Liquidity axiomliquidity.net  ·  02 / 02