Today's surge is essentially an emotion-driven Rebound.

What is the market speculating on? The Federal Reserve announced the cessation of tapering. It sounds like good news, but don’t get too excited—this is not a signal of a policy shift, at best it can be considered an action of "no longer actively withdrawing liquidity." More crucially, the Fed injected $13.5 billion in short-term funds into the banking system during the day, which is the second-largest single-day infusion since the COVID-19 pandemic.

The question is: why do we need a blood transfusion?

Because the financial system is really short of money. This 13.5 billion is not "actively injecting liquidity to stimulate the economy," but rather a forced firefighting operation. Banks have no liquidity, the Treasury is frantically issuing bonds to absorb money, and if the Federal Reserve does not fill this hole, the system may directly jam up. Therefore, this operation is a typical case of "treating the symptom, not the root cause."

Where is the real root of the problem? A regulatory rule called SLR. It acts like a tightening spell, severely restricting banks from expanding their balance sheets, making it impossible for banks to purchase government bonds on a large scale or cope with the Treasury's bond issuance pressure. As long as this rule remains unchanged, relying solely on temporary liquidity injections cannot solve the problem—today it's 13.5 billion, and in a couple of days it may need to be 20 billion again, and it just goes on like this.

So don't be misled by today's rise. What the market really needs to focus on is whether the SLR policy will be adjusted, not this emergency liquidity injection. If it continues to maintain the status quo, then this "lack of money - liquidity injection - lack of money again" script will repeat, and the market will continue to fluctuate wildly. Don't expect a real easing cycle to form.