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华语区首家金融二级市场交易的综合服务型平台。拥有行业最前沿的资讯研报，最专业的分析团队，交易所头部代理水平。关注RTA，看盘不迷路，交易能致富！（广场会即时更新行情资讯分享）推特&油管同名：@RTAFinance

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Detailed Explanation of Dollar Liquidity (III) - Bank Reserves

I. What are Bank Reserves?
The funds that banks use to issue loans primarily come from deposits from other customers. If banks use all deposits for lending to earn interest, although it improves the utilization of funds, they will face difficulties in meeting customer withdrawal demands whenever customers withdraw deposits. Bank reserves (Bank Reserves, also known as bank preparation funds) are cash held by financial institutions to meet central bank statutory requirements and customer withdrawal demands; these funds must be kept in the vaults of regional Federal Reserves or central bank accounts. According to the Basel III Accord, reserves are classified as high-quality liquid assets and are the safest and most direct liquidity assets for major banks. Compared to other assets, reserves are cash that can be used directly to settle debts.

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When will the Fed stop shrinking its balance sheet? Will it expand its balance sheet after it stops shrinking?

The abnormal fluctuation of SOFR at the end of the quarter is regarded as an important signal of liquidity crisis at the end of the balance sheet reduction cycle. Similar fluctuations also occurred on the eve of the end of the balance sheet reduction in 2019. JPM CEO said that the issue of stopping the balance sheet reduction has been put on the agenda. Generally speaking, the Federal Reserve will consider stopping the balance sheet reduction when the following conditions are met: 1. The excess liquidity shown by the reverse repurchase tool (RRP) is close to zero. At present, the indicator has fluctuated around 300 billion for several months, and theoretically there is room for further decline; 2. The size of the Federal Reserve's balance sheet has reached the preset target of 6.5 trillion, and it is still around 7 trillion. 3. The amplified fluctuation of SOFR at the end of the quarter suggests tight liquidity. Although it is unlikely that the balance sheet reduction will be stopped at the FOMC meeting in November, there is still some hope in December. It is expected that this opportunity will come within one to two quarters. In the long run, the new market bottoming process will begin after the balance sheet reduction stops, and then you can consider the layout of spot opportunities on dips.

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【FOMC meeting interpretation】 If we divide the FOMC meeting last week into three parts: interest rate decision, dot plot and press conference: First, the federal interest rate was unexpectedly cut by 50bp in the first round of the so-called "preventive rate cut", and the short-term sentiment of risky assets has remained good due to this dovish rate cut. But in fact, the dot plot is slightly hawkish. The reason for this is that it shows that there will be four rate cuts by the end of the year, a total of 100bp, which means that there will only be two more 25 cuts this year, and the room and frequency of rate cuts are limited. In addition, it is expected that there will be only four rate cuts in 2025, and interest rates will remain at about 3% in the next few years. Even if it enters a rate cut cycle, as long as the policy operates normally, the Federal Reserve will still use the neutral interest rate as a reference and maintain interest rates near it. This is its usual operating path, which does not meet the expectations of most people for zero interest rates and large-scale water release. In fact, we have seen that after the rate cut, the US dollar index and US Treasury yields, which are directly related to interest rates, have even rebounded. They have been priced in for rate cuts in advance, and now they are facing the lack of imagination of the negative impact and the subsequent rate cuts. The rise of risky assets such as US stocks and cryptocurrencies certainly cannot rule out the positive stimulus of a sharp interest rate cut, but more importantly, the soft landing guidance in Bao's speech. The nearly one-hour press conference can be summarized in one sentence: "The US economy will achieve a soft landing." On the interest rate cut day, a 50bp interest rate cut (a sharp interest rate cut) achieved a 25bp effect (recession concerns did not rise). From a personal perspective, the current market's expectations for a soft landing are the strongest this year. The expectation of a soft landing will not only increase the risk appetite of the US market, but also help listed companies expand production and increase valuations, which is directly beneficial to the numerator of US stocks, and interest rate sensitive assets/lagging assets such as the RMB and Bitcoin will also rise accordingly. At present, we should maintain the minimum respect for the soft landing expectations, and it is not appropriate to touch the left side. Against the background of poor overall US dollar liquidity, 67k-70k are more cost-effective opportunities to open an empty net, and a large volume breakthrough of 70,000 is a signal to leave the market. In addition, the first employment data after the interest rate cut will be released in early October. If it supports a soft landing, it will support risky assets; but if it deteriorates further, the recent soft landing trading logic will be broken and the success rate of short opening will be higher.#鲍威尔

【FOMC meeting interpretation】

If we divide the FOMC meeting last week into three parts: interest rate decision, dot plot and press conference: First, the federal interest rate was unexpectedly cut by 50bp in the first round of the so-called "preventive rate cut", and the short-term sentiment of risky assets has remained good due to this dovish rate cut. But in fact, the dot plot is slightly hawkish. The reason for this is that it shows that there will be four rate cuts by the end of the year, a total of 100bp, which means that there will only be two more 25 cuts this year, and the room and frequency of rate cuts are limited. In addition, it is expected that there will be only four rate cuts in 2025, and interest rates will remain at about 3% in the next few years. Even if it enters a rate cut cycle, as long as the policy operates normally, the Federal Reserve will still use the neutral interest rate as a reference and maintain interest rates near it. This is its usual operating path, which does not meet the expectations of most people for zero interest rates and large-scale water release. In fact, we have seen that after the rate cut, the US dollar index and US Treasury yields, which are directly related to interest rates, have even rebounded. They have been priced in for rate cuts in advance, and now they are facing the lack of imagination of the negative impact and the subsequent rate cuts.
The rise of risky assets such as US stocks and cryptocurrencies certainly cannot rule out the positive stimulus of a sharp interest rate cut, but more importantly, the soft landing guidance in Bao's speech. The nearly one-hour press conference can be summarized in one sentence: "The US economy will achieve a soft landing." On the interest rate cut day, a 50bp interest rate cut (a sharp interest rate cut) achieved a 25bp effect (recession concerns did not rise). From a personal perspective, the current market's expectations for a soft landing are the strongest this year. The expectation of a soft landing will not only increase the risk appetite of the US market, but also help listed companies expand production and increase valuations, which is directly beneficial to the numerator of US stocks, and interest rate sensitive assets/lagging assets such as the RMB and Bitcoin will also rise accordingly.
At present, we should maintain the minimum respect for the soft landing expectations, and it is not appropriate to touch the left side. Against the background of poor overall US dollar liquidity, 67k-70k are more cost-effective opportunities to open an empty net, and a large volume breakthrough of 70,000 is a signal to leave the market. In addition, the first employment data after the interest rate cut will be released in early October. If it supports a soft landing, it will support risky assets; but if it deteriorates further, the recent soft landing trading logic will be broken and the success rate of short opening will be higher.#鲍威尔

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Yen rises along with bonds as traders weigh Fed rate cuts

The yen strengthened against the dollar for a fourth straight day after new data supported expectations for Federal Reserve policy, while a fall in U.S. Treasury yields extended gains in emerging market currencies into Asia. European stock futures edged higher after largely range-bound trading in Asian trading. Shares in export-oriented Japanese economy fell as the yen strengthened to around 141 per dollar. Australian and Hong Kong stock benchmarks rose after Wall Street rose for a fourth straight day. #美降息25个基点预期升温 #上涨

The policy-sensitive two-year U.S. Treasury yield fell 6 basis points in Asian trading as emerging Asian currencies including the Korean won extended gains in Latin American currencies, weighing on the dollar.

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Sichuan and Harbin face off. Win? Draw? Lose!

The King of Understanding is under great pressure
This morning's debate between Harris and Trump, like the market's previous bet on a 50bp rate hike, the higher the expectations, the greater the disappointment. Due to Trump's previous clear stance on cryptocurrencies, especially Bitcoin, many people expect this debate to boost the crypto market again. Precisely because of the high expectations for Trump, the more they can't bear to see the King of Understanding make any mistakes. Even though Trump's performance this time was quite satisfactory, and even improved compared to the debate with Biden a few months ago, the market still interpreted it as a defeat. During the debate, Nasdaq futures fell 0.45% and Bitcoin fell back to $56,000.

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【YouTube Market Analysis】

Bitcoin price today is around $49,000, and the overall daily level is still in a bearish trend. Yesterday's rebound high of 61,000 is worth paying attention to. If it rises above 61,000 again, the current short-term bearish trend may end.

YouTube Macro Section - Discussion on September Rate Cut

1. A 25 basis point rate cut in September is a high probability event, unless the external situation worsens, a 50 basis point rate cut is possible.

2. There are currently two situations: preventive rate cuts and recessionary rate cuts. According to Bao's current expectation management, the probability of a preventive rate cut is higher, which means that the decline in Bitcoin after the rate cut may not be too deep. However, it is not ruled out that the situation will deteriorate in the middle, so the price will fall sharply. #降息预期 #比特币走势分析

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Detailed explanation of US dollar liquidity (Part 2) - TGA account of the Ministry of Finance

When it comes to the abundance of US dollar liquidity, the first thing we think of is often the Federal Reserve, interest rate cuts and balance sheet expansion. But in fact, in addition to the control of the Federal Reserve, the Treasury Department also plays an important role in the control of liquidity. At this moment, its status is more important than ever before, because the US public debt has once again hit a new high. The scale of debt is larger than the total economic volume, and the growth rate of interest is even faster than the growth rate of GDP. The scale, time and term of the issuance of treasury bonds are all decided by the Ministry of Finance alone, and the Federal Reserve can only stare blankly. The Ministry of Finance, which controls the supply of bonds, has become the most powerful department in the country. The Ministry of Finance has issued treasury bonds without any bottom line, creating a false prosperity driven by debt (or maintaining the illusion of a soft landing). The final result can only be to force the central bank to start the printing press again to clean up the country's huge debt.

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The U.S. Economy is at a Crossroads

Over the past two years, Federal Reserve Chairman Jerome Powell has focused steadfastly on fighting stubborn inflation, a strategy that has temporarily curbed price rises but also inevitably raised the risk of a recession. Now, Powell is pushing the U.S. economy to a critical crossroads. The next few months will be crucial for the U.S. economy. The Fed's top priority is to control inflation without bringing down the economy, while ensuring that there is no liquidity crisis in the U.S. bond market. The timing and magnitude of interest rate cuts will test the decision-making wisdom of Fed officials, and these decisions will determine the final outcome of this long battle against inflation. If Powell can succeed in lowering inflation without significantly raising unemployment, it would be a historic achievement.

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[Important Interpretation of ETFs]

Bitcoin ETFs received an inflow of $64.8 million, while Ethereum ETFs saw an outflow of $800,000. ETHE's holdings have decreased by 30% in the past month. Powell will speak at the Jackson Hole conference tonight. Last night, stocks and bonds fell across the board, but Bitcoin was relatively strong. Investors remained on the sidelines, and the situation of capital accumulation has changed. If the rate cut is finalized, we can expect a rebound in Bitcoin. #杰克逊霍尔年会 #ETF✅

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[Detailed explanation of US dollar liquidity (-)——Reverse repurchase agreement RRP]

The RRP mechanism (Reverse Repurchase Agreement) has become an important short-term liquidity adjustment tool of the Federal Reserve in the past decade. The specific operation is that the Federal Reserve sells securities to financial institutions and promises to repurchase these securities at a predetermined price at a certain time in the future. Simply put, the Federal Reserve "borrows" cash from financial institutions with U.S. Treasury bonds as collateral and pays a certain interest. After a period of time (usually overnight, that is, one day), the money is returned. This interest rate is 20 basis points lower than the upper limit of the Federal Reserve's target interest rate. Currently, the interest rate cap is 5.5%, so the RRP interest rate is 5.3%.

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[The yen interest rate hike crisis has temporarily subsided, but the road to recovery will not be smooth]

As mentioned above, carry trades involve borrowing in the currency of a low-interest rate country such as Japan, and then investing the money in another currency with a higher return. The main theme of the yen carry trade is "sell yen" and "buy US big tech stocks", that is, investors convert yen loans into US dollars and then buy popular technology stocks such as Nvidia and Microsoft. So far this year, the correlation between the yen and US stocks, especially the semiconductor stock index (SOX), has even exceeded the correlation between the yen and the Japanese stock market (TOPIX). Therefore, the Japanese interest rate hike this time has led to a three-day decline in the Japanese stock market, a sharp rise in the yen, and a rapid unwinding of yen carry trades. Concerns about a US recession and the extremely high valuations of technology stocks have contributed to the sharp drop in global risk assets on Monday.

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[The unemployment rate plummeted and Japan raised interest rates. Is the plunge in risky assets a coincidence or a necessity? 】

The latest US employment report last Friday was far-reaching, with only 110,000 new jobs and the unemployment rate rising from 4.1% to 4.3%. Although the labor force participation rate and GDP growth remain strong, and the US credit system crisis has not actually occurred, the global financial market has taken the lead in betting that the US economy is on the verge of deterioration. At the same time, the Bank of Japan raised interest rates by 15BP last Wednesday, exceeding expectations, and the yen quickly rose above 142. So we see that after digesting the news of unemployment and Japan's interest rate hike over the weekend, the capital flight of the entire risk asset has entered a climax stage. On August 5, the global financial market set off a storm. Bitcoin fell below $50,000, the Korean GEM circuit breaker, the Taiwan Index recorded the largest single-day drop, the Nasdaq Technology ETF hit the limit, and the Indian and Australian stock markets were not spared. The decline continued, and funds poured into the bond market for risk aversion. The Japanese market is particularly typical. The Nikkei 225 Index and Japanese government bond futures both circuit-breakers in the early trading, and the 10-year Japanese bond yield fell to 0.785%. The Nikkei Index has given up all its gains in 2024 in the past three weeks.

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Stock market plunge deepens, with Japanese stocks posting biggest drop since 2020

Global stocks tumbled on concerns about the U.S. economy and weak tech company earnings. Adding to the mood, Japanese shares plunged on expectations of further monetary tightening at home.
Euro Stoxx 50 futures fell 0.9%, with U.S. futures also falling. In Asia, the Topix fell as much as 5.7%, its biggest drop of 2020. The yen traded near its highest level since March, weighing on Japan’s export-oriented economy. Stocks also fell across Asia, from South Korea to Hong Kong, with shares of artificial intelligence chipmaker SK Hynix falling as much as 10.6%.

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Rate Cuts-U.S. Economy

1. Expectations of interest rate cuts
An important reason why the Federal Reserve has not yet started to cut interest rates is that the central bank's series of policies to combat inflation have been effective over the past two years, and judging from current data, employment, a key indicator of the US recession, has not deteriorated.

The current core PCE annual rate has dropped from its peak of 5.4% in 2022 to 2.6%, while the Fed's target is 2%. They hope to continue to move closer to this target and are worried that inflation will rebound if interest rates are cut too early.

The U.S. labor market has cooled from its earlier hot streak, with the unemployment rate rising to 4.1% in the past few months. New data on Wednesday showed wage pressures easing as well.

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【July 31 Federal Reserve Interest Rate Meeting Outlook】

At the June FOMC meeting, the dot plot originally rejected the view that three rate cuts might be possible this year, suggesting that only one rate cut is most likely this year. But considering the recent macro data and financial market trends, this view may be outdated. We expect the Fed to keep monetary policy unchanged at the FOMC meeting early Thursday morning, but will send the clearest signal of rate cuts so far and put it into practice at the FOMC meeting on September 18. The reason is that inflation and consumer spending are cooling in recent months, while unemployment is rising. In terms of inflation, both the CPI and PCE indexes in the first quarter are still too hot, but the data in May and June have slowed down significantly, especially seeing the easing trend in housing and rents. In addition, the unemployment rate has risen from a low of 3.4% in April last year to 4.1% in June, and the decline in the labor market has exceeded the Fed's forecast in June. The Fed has been seeking to achieve a "soft landing", and if the data supports them, a rate cut in September will be the right window to avoid a collapse of the economy and financial markets.

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AI sell-off sweeps the world, stocks fall, yen surges: Market roundup

European stock futures fell along with Asian shares on Thursday as investors began to exit the artificial intelligence frenzy that has fueled this year’s bull market. The yen rose for a fourth straight day ahead of a Bank of Japan meeting next week.

Eurozone Stoxx 50 contracts fell 0.6%, mainly due to the biggest drop in the MSCI Asia Pacific Index in more than three months. Japan's Nikkei 225 entered a technical correction, while South Korea's benchmark index fell nearly 2% as chipmaker SK Hynix's shares fell sharply despite beating earnings expectations. U.S. stock index futures rose after the S&P 500 fell 2.3%.

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【Check Ethereum ETF’s first day report card】

Last night, the US Ethereum spot ETF completed its first day of trading, which coincided with the 10th anniversary of Ethereum's first public offering (ICO) on July 22, 2014. A number of POS public chains are expected to gradually integrate into the mainstream financial market. The first-day transaction volume was US$1.083 billion, equivalent to 23% of the first-day transaction of the Ethereum ETF, and the net inflow of funds was US$107 million, equivalent to 16% of the first-day transaction of Ethereum.

The most eye-catching data comes from Grayscale's ETHE, which had a single-day trading volume of $469 million and a single-day net outflow of $484 million. Grayscale ETHE currently has only $8.6 billion in AUM, and today's one-time redemption of more than 400 million is close to the terrifying 5%. Combined with the market performance, such a large number of redemptions is not necessarily a bad thing. It means that the noise in the ETF shares is being cleared quickly. Unless there is another forced liquidation event such as FTX liquidation, the large outflow should not last for a few days. The reasons for the initial large net outflow are similar to those of the Bitcoin ETF at the time:

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[Bitcoin ETF outflows, funds pouring into Ethereum ETF? ]

Bitcoin ETF has a small outflow, but Ethereum ETF has a net inflow of $100 million on the first day of trading, and the data is relatively optimistic. Several large issuers have demonstrated their purchasing power. Bitwise seems to be interested in redeeming BTC and switching to ETH. Issuers are all thinking about grabbing more market share on ETH. On the other hand, Grayscale ETHE is only more than 8 billion, and more than 400 million was redeemed at one time today, which is equivalent to 5%. If there is no forced redemption like FTX liquidation in the future, the large outflow will not last for a few days. #美国以太坊现货ETF开始交易

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Trump and rate cut trades are over-bet

After the Trump-Trump incident led to a sharp rise in expectations of his victory in the US presidential election, the "Trump trade" that followed is stirring up the US market. The so-called "Trump trade" refers to the trading actions taken by investors to bet on Trump's victory in the US presidential election and predict the future market trend based on this. The current consensus among market investors is that Trump will further relax market supervision and strengthen trade protectionism in his second term. From the perspective of the stock market, Trump's policy tendencies are beneficial to bank stocks, energy stocks, and healthcare stocks; in the bond market, investors are worried about the continued high inflation in the United States and the rise in long-term Treasury yields; in the field of cryptocurrency, due to the frequent goodwill of Trump and his deputy Vance, the expectation of US dollar depreciation has risen, and investors regard it as a tool to fight inflation and currency depreciation.

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Grayscale has updated its Ethereum ETF and its fee schedule for its upcoming launch next week. Grayscale’s $ETH will now be the lowest-cost ETF with 0% fees for 6 months.

The fee for the Ethereum Mini Trust (ticker $ETH) was reduced from 0.25% to 0.15% in the revised S-1 filing.

The launch of the Ethereum ETF is getting closer! 🚀#以太坊ETF批准预期