The Fed is injecting approximately $6.8 billion via repurchase agreements—the first liquidity operation of this kind since 2020.

Over the past 10 days, roughly $38 billion has been deployed through repo operations .

When liquidity flows into a market:

Core mechanism: More money chasing limited assets → prices rise

Chain reaction:

- Easier to buy/sell (better liquidity) → lower volatility

- Rising prices + available capital → investors take more risk

- Cheaper borrowing costs → businesses expand, spending increases

- Everything moves together → correlations shift

NO WAIT:

The core trap:

Liquidity = short-term relief but long-term addiction

→ Markets demand more each time

→ Withdrawal becomes impossible

→ The system becomes unstable

The risk: Too much liquidity for too long → prices detach from fundamentals → potential bubble