Looking back at this week's data, it is still favorable for meeting market expectations, but liquidity remains tight. Especially last night, the release of September PCE data was lower than expected year-on-year, while others were in line with expectations. Although the impact weight of PCE in September has not been significant in the past two months, the positive data still has not been able to boost it. The US stock market is relatively soft, and the market is declining. I think the possible reason is that: 1. The market has already had sufficient expectations for a rate cut in December, which was discussed last weekend. The market's valuation and probability of a rate cut in December are close to 90%. The expectation of interest rate cuts has almost been fulfilled, and fulfilling the expectation means that the emotional drive is also almost over. 2. As we discussed last weekend, the closer we get to the interest rate meeting and mid month, the market is about to experience significant fluctuations. Due to the upcoming interest rate meeting, November data, the Senate vote on the Affordable Care Act, and the Bank of Japan's interest rate hike, these are all major events that will affect the market, increasing uncertainty, risk aversion, and volatility. 3. Liquidity is still very tight, and many friends believe that once the Federal Reserve stops shrinking its balance sheet and TGA starts spending, liquidity can return. This is also something I've been talking about since mid November: https://(x.com)/qinbafrank/status/199677573750084405? S=46&t=k6rimWSEbo2D2TXolYcM-A: Even if the Ministry of Finance's TGA expenditure and the Federal Reserve stops reducing its balance sheet, it is difficult to bring reserves back to the median value of the past three years. Bank reserves are still hovering at the critical point of sufficient to sufficient, and cannot return to a state of sufficient and excess. Unable to reach an excess state, liquidity remains tight, making it difficult to see significant improvement. After December 1st, the Federal Reserve's balance sheet continued to decline, leading to a slight decrease in the size of bank reserves. Why? On December 1, the Federal Reserve said that it would stop shrinking the balance sheet, just stop the reduction of treasury bond, and the mbs would continue (except that the Federal Reserve would later turn the funds reduced by mbs to buy short-term bonds to keep the balance sheet stable). The current situation is that the reduction of MBs on December 1 is still continuing, and the purchase of short-term bonds has not yet started. This is also a possible RMP (Reserve Management Purchase) operation after the Federal Reserve was discussed yesterday. In addition to investing the funds reduced by MBS into short-term bonds, a net monthly purchase of $20 billion in short-term bonds is needed to stabilize liquidity. But if the Federal Reserve has not publicly announced it yet, then this matter has not actually happened. This also means that in the future, only when the Federal Reserve resumes bond purchases and reserves rise to over $3 trillion, can we see a substantial improvement in liquidity. Only when reserves rise to over $3.2 trillion can we say that it will be in a state of abundance and surplus. Prior to this, assets that were particularly sensitive to liquidity were difficult to break out of a sustained upward trend like a pancake, with wide fluctuations. This article is sponsored by the meme trading tool http://(xxyy. io) | Fast trading, versatile features, and can be used to monitor on chain wallets @useXXYYio