The Fed injected liquidity into the market in December through multiple tools like rate cuts + QE + RPONTSYD. This morning, the Fed injected $16 billion in liquidity into the market via RPONTSYD (overnight repo), marking the second-largest scale since the COVID-19 pandemic. Just earlier, on 12/10, they had completed a rate cut. Recently, the Fed has been intensively using the RPONTSYD (overnight repo) tool. The largest scale since the pandemic was $29.4 billion on 10/31, and today’s $16 billion is the second-largest. See Chart 1. This level of intensity is already approaching the frequency seen during the COVID-19 pandemic. See Chart 2. But one thing people are overlooking is that RPONTSYD is just a short-term liquidity tool, while balance sheet expansion is also happening simultaneously. Since the Fed stopped QT (quantitative tightening) on 12/2, it has conducted QE (quantitative easing) three times in a row, with the scale gradually increasing. Check out the red circles I marked in Screenshot 3: First time: 12/9, about $4 billion; Second time: 12/16, about $17 billion; Third time: 12/23, about $25 billion. Since I monitor this data daily, it might be due to statistical reasons, but the QE data seems to have a one-week delay in display. As for my expectations for future market liquidity, I think there are two key points: 1. After QT ends, it won’t be QT anymore, so the expectation for easing is certain. For now, liquidity is being injected into the market in an orderly manner at a weekly pace. 2. The RPONTSYD (overnight repo) tool is being used frequently, with usage frequency and scale comparable to the COVID-19 period, indicating that the market is indeed in urgent need of liquidity. So, what are we panicking about? Let’s just wait for the market turning point to appear.