Liquidity tsunami countdown! The Federal Reserve may launch $6.9 trillion of liquidity

On December 10, the Federal Reserve may fire a combined arrow of "interest rate cuts + bond purchases", opening an epic liquidity release for the global market.

UBS has revealed that the Federal Reserve plans to inject up to $6.9 trillion of liquidity into the market starting in early 2026, initially injecting up to $40 billion per month.

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1 Alarm has sounded: money is becoming "expensive"

The key "lubricant" of the financial system—reserves are becoming scarce. The SOFR rate, which measures the cost of short-term funds, frequently "breaches" its limits, which is a clear alarm of tightening liquidity, forcing the Federal Reserve to take action to "inject liquidity".

2 Not QE, but with great power

The Federal Reserve's operation focuses on purchasing short-term Treasury bills, defined as technical "liquidity management". However, the continuous and targeted injection of massive funds, combined with expectations of interest rate cuts, has the power to inflate global risk asset prices, akin to quantitative easing (QE).

3 Institutions have taken action: new rules of the game

While the market hesitates, savvy capital has already entered. The Bitcoin spot ETF has opened the channel for institutional entry, with only about $50 million in natural selling pressure from Bitcoin per day being swallowed up by institutions and companies. The market-driving logic has shifted from retail sentiment to the global macro floodgate.

4 Last window: choices during the dry season

There exists a "dry period" of 1-2 months from the policy announcement to the overflow of funds. This is often the moment of greatest fear and volatility in the market, but it could also be the last window to get on board before the storm.

When the liquidity tsunami arrives, everything will change. Will you choose to hesitate and miss out, or act before consensus is reached? The answer may lie in this week's meeting.