A picture to understand the overall framework of the US liquidity system ‼️ Why are we still talking about liquidity, whether it's the US stock market or Bitcoin, Price fluctuations have never been a mystery of candlesticks, liquidity is the core factor determining prices. So, is it suitable for the US stock market to buy at the bottom at this stage? Don't buy US stocks with the strategy of bargain hunting until the renewal of US treasury bond bonds is solved. It's too risky. In April, the US dollar liquidity in the peak tax season will decrease by about $400 billion, and by June, nearly $10 trillion of treasury bond will be due. The Federal Reserve is currently only reducing the size of its balance sheet, and it is highly likely that it is not yet at the bottom. Therefore, the strategy can adopt fixed investment rather than bottom fishing. Back to the brief framework of the U.S. liquidity system, the Federal Reserve provides liquidity to the real economy through the purchase of treasury bond bonds, MBS and other means, and flows into the cash pool after liquidity creation. The liquidity of the cash pool needs to find investments in money market instruments. Therefore, the three main components of the US money market have mainly formed: Firstly, the traditional commercial banking system; Secondly, a shadow banking system mediated by money market funds; Thirdly, the repurchase market mediated by primary traders. In addition, as the lender of last resort, the Federal Reserve also provides loans to financial institutions and the real economy through various alphabet tools during crises, thereby maintaining market liquidity. The US money market can be mainly divided into three main parts: (1) The commercial banking system uses traditional commercial banks as intermediaries to absorb funds from the cash pool through deposits, certificates of deposit, bills and other ways. After meeting the financing needs of the real economy, long-term treasury bond and other non monetary markets, it deposits in the central bank in the form of excess reserves to collect IOER. When the interest rate of short-term treasury bond and repo is higher than IOER, commercial banks will also invest in short-term treasury bond and repo market. In addition, FHLBs can also be seen as a component of the commercial banking system. After meeting the needs of housing loans and community financing, FHLBs lend excess liquidity to some foreign bank branches in the United States, achieving arbitrage trading of IOER-EFFR. (2) The shadow banking system mainly uses monetary funds as intermediaries and can be considered an important component of the shadow banking system. Monetary funds issue monetary fund shares to cash pools, which can be invested in various money market instruments, and excess liquidity flows back to the Federal Reserve through ONRRP. (3) The repo market is mediated by primary traders, who on one hand connect with the demand of money funds and cash pools to invest in the repo market, and on the other hand meet the short-term funding needs of leveraged investors. It can also be seen as a component of shadow banking. Commercial banks also participate in the repo market when the repo rate is higher than IOER; When there is a lack of liquidity or even a liquidity crisis in the market, the Federal Reserve will also directly conduct positive repurchases with primary traders to raise funds from them. Brothers, whether it's the US stock market or Bitcoin, the rise and fall of the candlestick is never a mystery, but a precise projection of the US dollar tide, macroeconomic policies, geopolitical games, liquidity cores, and so on. This article is sponsored by Gateio | @ Gateio_zh