Stop dreaming. The "big liquidity flood" in 2026 probably won't happen.

The Federal Reserve's latest dot plot has already made it clear: two rate cuts next year, another one in 2027, and only by 2028 will we see normalized interest rates. This directly shatters the market's sweet fantasy—that the Fed won't open the floodgates to rescue the market. That logic of "central bank stepping in to take the baton" should now be put away.

But that's not the most critical point. What's more heartbreaking is that the market has misunderstood the Fed's purchase of $400 billion in government bonds. Many get excited just hearing "purchase," but this isn't QE—it's RMP (Repurchase Operations). The difference is huge: QE is actual liquidity injection into the market, while RMP is just emergency measures to fill the liquidity gap banks face at year-end.

To use a more vivid analogy: QE is pouring water into the pond, QT is draining it, and RMP is scooping back the water that has already been spilled out for reuse—once used, it still needs to be repaid. It's just technical stabilization, not a signal of a new round of easing.

The key indicators that truly reflect the market's liquidity trend are: whether the SLR has been relaxed, whether banks can expand their balance sheets, whether the government will provide real financial support, and how the ON RRP rules are adjusted.

Next, keep an eye on two data points: one is the non-farm payrolls report released in December (especially the November figure, which might be affected by the government shutdown); the other is the January CPI—if inflation remains uncontrolled after rate cuts, the Fed will definitely tighten its belt further.

In short, the current market environment can't be called optimistic. Expecting a big liquidity flood in 2026? Based on the current trajectory, it's more like wishing upon a star. Only by truly understanding the essence of policy can you see where the market is headed.