Core Viewpoint - The current liquidity level in the US remains healthy, but the focus should shift to the effectiveness of monetary policy stimulus, particularly the transmission of interest rate cuts to long-term rates, which is crucial for the recovery of the real economy [2][4][22] Group 1: Liquidity Status - Following the Silicon Valley Bank crisis, there has been no large-scale financial risk exposure in the US, and the stock market has recovered and reached new highs [4] - The US liquidity stock level is healthy, with concerns not stemming from insufficient liquidity but from potential mismatches and increased risk exposure due to further liquidity injections [4][11] - The current excess reserves in the US are approximately $900 billion, significantly higher than the $80 billion level during the 2019 repo market crisis [7] Group 2: Monetary Policy and Economic Impact - The effectiveness of interest rate cuts in stimulating the real economy is under scrutiny, as the transmission to long-term rates remains weak, limiting recovery in sectors like manufacturing and real estate [22] - The average duration of assets on bank balance sheets is increasing, raising concerns about interest rate sensitivity and liquidity risks [22][18] - The low supply of non-bond assets, such as commercial loans and residential mortgages, has led banks to allocate more to bond assets, further increasing average duration and interest rate risk [18] Group 3: Structural Changes in Financial System - The proportion of US Treasury securities in banks' loanable assets has increased by nearly 8 percentage points to 53%, primarily due to an increase in held-to-maturity assets [13] - The overall losses in the US banking sector amount to $410 billion, with approximately $260 billion stemming from held-to-maturity assets, which limits banks' credit supply capabilities [17] - The distribution of reserves has become more even, with the largest banks bearing the brunt of the Fed's balance sheet reduction, indicating a more resilient financial system [8][10]

Group 1: Market Overview - Since the Silicon Valley Bank crisis, there have been no significant financial risks in the U.S., with the stock market recovering and reaching new highs after the April shock[3] - Concerns about liquidity have dissipated, primarily due to the ample supply of U.S. dollar liquidity[3] Group 2: Liquidity Analysis - The U.S. liquidity stock remains healthy, with approximately $500 billion in TGA replenishment needs increasing market liquidity concerns[4] - Risks stem not from insufficient liquidity but from potential mismatches and increased risk exposure following further liquidity injections[4] Group 3: Credit Creation Efficiency - If interest rate cuts do not effectively transmit to long-term rates, the U.S. may face a scenario of abundant liquidity but insufficient credit demand[4] - This situation could exacerbate the long-duration trend in bank balance sheets and inflate asset price bubbles, increasing sensitivity to interest rates and liquidity risks[4] Group 4: Banking System Resilience - As of Q1 2025, U.S. banks' excess reserves are estimated at around $900 billion, significantly above levels seen during the 2019 repo market crisis[12] - The liquidity supply capacity remains robust, with traditional large banks maintaining high liquidity supply capabilities in the repo market[12] Group 5: Structural Changes in Banking Assets - The proportion of U.S. Treasury securities in banks' loanable assets has increased by over 8 percentage points to 53% for top banks, indicating a shift towards holding to maturity assets[25] - The overall banking sector has unrealized losses totaling $410 billion, with approximately $260 billion from held-to-maturity assets, limiting banks' ability to liquidate assets for liquidity[32]

Group 1: Market Overview - Since the Silicon Valley Bank crisis, there has been no large-scale financial risk exposure in the U.S. market[1] - Following the April 1.0 liberation day shock, U.S. stocks not only recovered but also reached new highs[1] - Concerns about liquidity have dissipated, supported by ample dollar liquidity despite the Federal Reserve's balance sheet reduction[1] Group 2: Liquidity and Credit Demand - The current liquidity level in the U.S. remains healthy, with risks stemming from potential mismatches and increased risk exposure after further liquidity injections[1] - A focus on credit creation efficiency is essential, as insufficient credit demand may arise despite abundant liquidity[1] - If interest rate cuts do not effectively transmit to long-term rates, the U.S. may face a macroeconomic scenario of excess liquidity but insufficient credit demand[1] Group 3: Banking System Analysis - As of Q1 2025, U.S. banks have approximately $900 billion in excess reserves, significantly higher than during the 2019 repo market crisis[7] - The liquidity supply capability of the banking system remains robust, with traditional large banks maintaining high liquidity supply in the repo market[7] - The distribution of reserves has become more even, with the top five banks bearing the brunt of the balance sheet reduction, enhancing the resilience of the financial system[9] Group 4: Structural Changes in Assets - The proportion of U.S. Treasury securities in the total loanable assets has increased by nearly 8 percentage points to 53% for traditional large banks[16] - The banking sector has unrealized losses totaling $410 billion, with about $260 billion from hold-to-maturity (HTM) assets, limiting liquidity[20] - The increase in HTM assets has led to longer asset durations, reflecting a decline in credit supply capabilities due to low demand for other loan types[21]