In-depth analysis of the current macro environment of the Federal Reserve: Don't be fooled by "pseudo-easing".
Recently, the Federal Reserve's dot plot has released a clear signal: two rate cuts expected in 2026, one rate cut in 2027, and the interest rate to remain unchanged in 2028. This means that the large-scale "easing" that many people are anticipating will not occur in the short term. Perspectives like CZ's prediction of a "super cycle of Bitcoin driven by massive easing from the Federal Reserve" have already shaken the foundation.
At the same time, the Federal Reserve recently purchased $40 billion in government bonds, sparking discussions in the market about "balance sheet expansion easing." But in reality, this belongs to RMP and is fundamentally different from true QE:
QE is proactive "easing," aimed at lowering long-term interest rates and stimulating the economy.
QT is proactive "tightening," which tightens the financial environment.
RMP is merely "refilling," preventing liquidity shortages in the banking system due to seasonal factors, and is not a substantial injection of new funds into the market.
To put it metaphorically: the current Federal Reserve is like repairing a leaking water tank, rather than opening the floodgates to fill it up.
The key point is:
The Federal Reserve has clearly stated that RMP purchases will maintain a relatively high pace until April 2026, but will slow down as seasonal factors dissipate. The real impact on market liquidity will depend on whether SLR is relaxed, whether banks can proactively expand their balance sheets, the pace of the Treasury's replenishment, and how the Federal Reserve manages the overnight reverse repurchase scale.
Next, focus on two key data points:
The non-farm payroll data for November, to be released on December 16, is expected to be weak, as November was affected by the aftermath of the U.S. government shutdown.
The CPI data for November, to be released on December 18, is a core observation point. If there is no rebound in the CPI for November after the rate cuts in September and October, it will open up space for further easing from the Federal Reserve.
My personal view:
The current macro environment is not optimistic, and it will be difficult to see a large-scale "easing" from the Federal Reserve at least until 2026. The market needs to break away from its reliance on short-term liquidity stimulus and rationally view the structural adjustment phase.
Don't expect a flood of liquidity immediately; be prepared for a period of calm.
There are always opportunities in the market; the key is to operate calmly. Baiyue will continue to help everyone keep an eye on on-chain dynamics, and we will move forward steadily together! Follow Baiyue and participate in every attack of Baiyue villagers! Baiyue will announce specific entry times and real-time news in the village every day!
