🔥Breaking! The Federal Reserve suddenly slams the brakes on policy, stopping balance sheet reduction, effective December 1!\nSince June 2022, the Federal Reserve has been "pulling back," reducing its nearly $9 trillion balance sheet to about $6.6 trillion. So why has it stopped now? The economy simply can't hold up any longer, growth is clearly slowing down, and if they keep pulling back, market liquidity will collapse. Moreover, bank reserves are decreasing, and alarms in the money market are ringing; the Federal Reserve dares not hold firm.\nIt's not that simple behind the scenes; on the surface, it's an adjustment in monetary policy, but it's closely tied to the U.S. fiscal deficit. During the pandemic, the Federal Reserve bought U.S. Treasuries, essentially "sending money" to the Treasury, which may account for more than half of the deficit. If they continue to reduce the balance sheet and sell Treasuries, the cost of borrowing for the U.S. government will skyrocket.\nThe Federal Reserve now feels like it's walking a tightrope, with inflation still around 3% high, while the job market has already weakened. It's tough to choose between supporting the economy or curbing inflation!\nFor the market, in the short term, it's a good thing; global liquidity pressure is easing, and money isn’t as tight. But don’t be blindly optimistic; the Federal Reserve's assets are still $2 trillion more than before the pandemic, and hot money might surge again to impact asset prices, definitely increasing volatility.\nAnother thing, U.S. economic data for October has been delayed until December due to the government shutdown. This "data vacuum period" combined with "policy uncertainty" has left market expectations in disarray, which is one reason for the recent violent fluctuations in U.S. stocks.\nThis is how I see it: the Federal Reserve's pause is a preemptive measure for the economy, and also a signal that liquidity is nearing its bottom. The wave of interest rate cuts in 2025 - 2026 may really be coming, and the market needs to be prepared!\nThe Federal Reserve's recent actions are filled with hidden agendas, and the future direction of the market is shrouded in mystery! Will it rise or fall, and how should we position ourselves? I’m Brother Tao, who understands the market, continuously analyzing the impact of policies for you. Follow me to gain insights into market opportunities in advance, and seize wealth opportunities amidst the changing tides!