As soon as the market landed, there was a surge in sentiment because today is indeed the day the Federal Reserve officially ends its balance sheet reduction. During the day, the Federal Reserve injected $13.5 billion into the banking system through overnight repurchases, marking the second-largest single-day liquidity injection since the pandemic.
However, these overnight repurchases are not an easing measure but rather a response to the system being drained too quickly, forcing the Federal Reserve to step in for a 'liquidity injection,' which is a one-time, passive liquidity fill. The core variable that truly determines whether the short end will continue to tighten is still the SLR, which has not been relaxed. Banks still cannot expand their balance sheets, cannot significantly absorb U.S. Treasuries, and are unable to handle the shocks brought by fiscal replenishments.
Overall, this round of upward movement is more of a sentiment reaction to the end of balance sheet reduction rather than an improvement in system liquidity due to the $13.5 billion repurchase funds. Whether the short end of the dollar can truly ease depends not on the overnight repurchases but on whether the SLR will be adjusted. If the SLR continues to maintain its current hard constraints, then this passive liquidity filling will repeatedly occur, and the market will oscillate between being drained and being replenished, without forming sustained monetary easing. $ETH $BTC $SOL #BinanceBlockchainWeek #加密市场回调