below This chart is called 'Excess Liquidity as a Percentage of Bank Deposits', which is a very interesting indicator that can be understood as a barometer of market liquidity conditions. And this time, the Federal Reserve injects $40 billion into the market every month, essentially solving the problem of liquidity pressure. From the chart, it can be seen that it has already fallen below the average of the gray dashed line (about 20.6%) and has reached a historical low of around 15.7%. From historical data, every time liquidity rebounds, it will bring value recovery to risk assets. Looking back at the history of the past 15 years ： 2009-2013: In the early stages of QE, liquidity gradually accumulated. After the financial crisis, the Federal Reserve launched QE, and bank reserves began to increase. The proportion of excess liquidity steadily increased from 12.7% to over 20%. 2014-2018: QE ended and the balance sheet was reduced, resulting in a mild decline in liquidity. The Federal Reserve stopped bond purchases in 2014 and began "balance sheet reduction" (reducing the size of its balance sheet) in 2017. The growth rate of liquidity slowed down, and due to inertia factors, there was even a slight decline in 2018-2019. Eventually, it hit rock bottom (11.1%) in September 2019, triggering the "repurchase storm". 2020-2021: Epidemic QE, liquidity flooding, in response to the impact of the epidemic, the Federal Reserve restarted unlimited QE, the balance sheet rapidly expanded, bank reserves and reverse repurchase balances surged, and the proportion of excess liquidity reached a peak of 32.3% in 2021. The market was filled with "excess" funds, and various assets skyrocketed. 2022-2024: Interest rate hikes and balance sheet contraction, rapid liquidity contraction To combat high inflation, the Federal Reserve has initiated an aggressive interest rate hike cycle and simultaneously implemented "quantitative tightening" (QT), which means stopping reinvestment in maturing bonds and allowing them to naturally mature and exit the balance sheet. This has led to a significant decrease in bank reserves, and the proportion of excess liquidity has been declining from a high of 32% to around 19.5% by the end of 2024, approaching the historical average level. 2025-2026: Liquidity has basically started to bottom out and rebound. The current data is 15.7%, lower than the historical average (20.6%) and also lower than the level at the end of 2024. This indicates that after more than two years of tightening, the liquidity of the banking system has returned to a relatively 'tight balance' state, even slightly tense. Since liquidity has bottomed out, coupled with the Federal Reserve's monthly repurchase of 40 billion since December, there is no need to be overly pessimistic. The rebound in liquidity is a highly probable event in the long term! Winter has arrived, can spring be far behind?