1. What is the $40 billion short-term bond purchase plan? Official name: RMP (Reserve Management Purchases), also known as "Reserve Management Purchases". The Federal Reserve announced that it would spend about $40 billion a month on short-term treasury bond bonds (usually treasury bond with a maturity of less than one year) in the open market The Federal Reserve's purchase of bonds is equivalent to handing over its US dollar reserves to the market. The Federal Reserve's balance sheet is expanding, and there is more money in the market. 2. Why isn't this quantitative easing (QE) by the Federal Reserve? The Federal Reserve refers to repurchase operations and liquidity management, primarily aimed at maintaining short-term interest rates within the target range and ensuring sufficient liquidity in the financial system. The traditional QE usually buys long-term treasury bond to lower long-term interest rates, encourage enterprises to borrow, and directly stimulate the economy. This time, it was implemented through RMP (repurchase facility), and short-term treasury bond were purchased. The purpose is to replenish the reserves of the banking system and ensure its smooth operation, rather than to lower long-term interest rates. The Federal Reserve believes that this is a repair to the short-term capital market rather than a major stimulus to the economy. 3. Why the market sees it as invisible QE: The scale of $40 billion per month is essentially expanding the Federal Reserve's balance sheet and injecting a large amount of liquidity into the market, similar to the effect of QE. But the Federal Reserve stated in its expectation management that it will not set a total size limit and maintain policy flexibility Increasing liquidity will eventually push up asset prices, and the purchase of short-term treasury bond will lower short-term interest rates, prompting funds to flow to risky assets. When signs of economic slowdown appear, this operation is often a prelude to larger scale easing policies, and on the other hand, it also represents the substantial end of the tightening cycle and the return of the liquidity cycle. For investors, this is often interpreted as an increase in the risk of holding cash and an increase in the attractiveness of holding assets.