The liquidity of the US dollar is recovering, but the issuance of stablecoins has not yet caught up. TGA's weekly average was $880.2 billion, with Wednesday (July 1st) closing at $807.4 billion. This led to an average weekly reserve requirement of $2.96 trillion for banks, but by Wednesday's close, it had skyrocketed to $3.07 trillion. As the most important component of US dollar liquidity, bank reserves are rapidly increasing, and liquidity is naturally recovering. However, the issuance of stablecoins is still at the bottom and has not changed. Let's see if the subsequent issuance of stablecoins can follow suit. 1. Why did the Ministry of Finance incur such a large expenditure around July 1st? this It is the peak of regular fiscal expenditures, and early July is the time when many federal payments are concentrated (such as social security, medical insurance, federal employee wages, contractor payments, quarterly grants, etc.). 2. Is there still a possibility of further decline after July? There is a certain probability of continuing to decline or maintaining low volatility in the short term (the next 1-2 weeks), but the magnitude is unlikely to be as extreme as on July 1st. The driving factor for continued decline: July is still a relatively concentrated month for government spending, and without large-scale tax inflows or bond issuance to replenish water, TGA will continue to be "drained" by spending. 3. In late July, overall liquidity will become slightly tight again In the quarterly refinancing statement released by the US Treasury Department in May, the TGA balance is expected to peak at $1 trillion (fluctuating by $50 billion) in late July, mainly driven by the following reasons: 1) Dealing with Large Expected Outflows This is the most direct trigger. The Ministry of Finance clearly stated in its statement that the cash peak in late July was "driven by the expected large-scale outflow of funds at that time". The US government usually faces intensive spending peaks at the beginning and middle of August, including large-scale social security welfare distribution, medical insurance settlement expenditure, and a large number of principal and interest payments due on old treasury bond. In order to prevent a liquidity gap, the Ministry of Finance must 'store water' in advance by the end of July. 2) Follow the "Cash Balance Policy" of the Ministry of Finance The US Treasury Department has long adhered to a prudent cash management principle: TGA accounts must always maintain sufficient cash to cover future fiscal expenditures for a certain period of time (usually around a week), ensuring that the government can operate smoothly and fulfill payment obligations in the event of sudden disruptions in financial markets. With the expansion of the structural fiscal deficit in the United States in recent years and the increase in the scale of various expenditures, the absolute amount required to meet this "safety buffer" has also skyrocketed. The peak of 1 trillion yuan is a reflection of this policy under the current expenditure scale. Overall, the liquidity in July is likely to be loose in the beginning and tight in the end. As discussed yesterday and last Saturday, Da Bing has withstood the fragile period of the last two days at the end of June and will have a rebound.