Don't just focus on interest rate cuts! Powell's "ultimate bomb" QT shift is a hundred times more important than the interest rate.

While everyone is still debating whether there will be interest rate cuts this year and how many times, Wall Street has already shifted its focus to the Federal Reserve's QT (Quantitative Tightening) — this is the core of monetary policy that is more critical than interest rate cuts.

A rate cut is just a small adjustment; the shift in QT is the strategic signal. The Federal Reserve has two major monetary policy tools: one is the Intrerest Rate, and the other is the balance sheet (i.e., tapering or expanding). The QT over the past few years has been equivalent to withdrawing hundreds of billions of dollars in liquidity from the market each month, which is the key to suppressing the bull market.

The signal is now clear: the Federal Reserve's overnight reverse repurchase usage has plummeted, bank reserves are tight, and Powell has also started to mention "slowing down balance sheet reduction", which means that market liquidity is about to shift from "draining" to "accumulating".

The reason why U.S. stocks are unable to decline significantly while the Nasdaq remains at a high level is precisely because "smart money" has positioned itself in advance for the shift from QT. However, the cryptocurrency market is reacting slowly, with Bitcoin consolidating around $60,000 and not keeping up with this positive news. This could be the last opportunity to get on board—historically, the window between the end of QT and the beginning of QE is often the eve of a significant rise in risk assets.

But we must also be wary of "the good news has been fully priced in": the rule of financial markets is "buy the expectation, sell the fact". Once Powell officially announces the halt of QT, it is likely to be the "shoe dropping", and it may even rise in the short term like in 2019 after the official announcement, followed by a correction.

The ultimate key is the chain of "stop QT → maintain balance → restart QE": The scale of U.S. Treasury Department bond issuance remains high, and the Federal Reserve will ultimately return to quantitative easing (QE). By then, market liquidity will significantly increase, but by the time QE actually starts, the best allocation opportunity will have long passed.

The real opportunity lies in the now: ambushing assets sensitive to liquidity such as Bitcoin and tech stocks to earn money from the "expectation difference," rather than waiting for news to materialize before taking action.

In short, lowering interest rates is an open card, while the shift in QT is the hidden card in Powell's hand, and now this card has shown some clues.

#晒出我的Alpha积分