BlockBeats News: Fed Balance-Sheet Moves and Liquidity Signals Spark Market Rally as Rate-Cut Bets Grow

Market momentum this week has shifted focus from rate trajectories to the Federal Reserve balance sheet and potential liquidity injections. With the central bank halting balance sheet runoff, attention centers on how reserve management and asset purchases could underpin the ongoing rally in risk assets and equities.

Bank of America’s global rate strategy team projects a January policy signal introducing Treasury bill purchases of short maturities at about $45 billion per month as part of balance sheet operations. Some market voices believe the move could be delayed if liquidity conditions remain orderly.

Vanguard’s Roger Hallam expects a later start for bill buying, estimating $15-20 billion per month by late Q1 or early Q2. PineBridge’s Kelley signals a possible 25 bp rate cut on December 10, projecting a policy corridor near 3.5%-3.75% toward the neutral rate.