The US is likely heading toward:

• Lower rates (circa 3%) despite near-term inflation


• More liquidity injections (US$1.5 trillion in 2026)


• Continued unconventional policy tools (Treasury QE, stable coin-driven demand)

Investment Implications

• Risk-On: favor Bitcoin, equities, and growth assets


• Watch for Fed rate cuts and monitor US Treasury bill

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Investors must prioritize tracking liquidity flows over traditional cycles, as innovative policies blur monetary/fiscal lines and reshape credit creation, with the coming of stable coins potentially shifting power toward government intermediation and liquidity growth.

Looking ahead, the US is likely to see lower policy rates (circa 3%) and increased liquidity stimulus despite near-term inflation risks, as supply-side shocks from higher tariffs (taxes) slow growth and eventually curb price pressures. The Fed and Treasury are employing unconventional tools – including ‘Not-QE, QE’ (backdoor liquidity injections),... See more

Put another way, the liquidity of the private sector is determined by the size of its asset holdings divided by their average duration . Thus, any change in average duration must result in a change in ‘liquidity’. These actions are not limited to the US Federal Reserve, because the US Treasury is also a major debt issuer. If the Treasury changes... See more

QE (quantitative easing) operations essentially involve asset swaps. The Fed balance sheet expands by the Fed buying securities in the open market and simultaneously injecting liquidity as payment. Balance sheets still balance, but the Fed’s balance sheet has grown larger and the private sector’s balance sheet has changed its composition and,... See more