On December 10, the Fed is likely to cut another 25 basis points, and the policy rate will fall to the range of 3.5%-3.75% - getting closer and closer to the neutral interest rate of about 3%.

But to be honest, the interest rate cut alone is out. What is really worth paying attention to is the Fed's actions after stopping its balance sheet reduction: how to play the balance sheet? Will it inject new liquidity into the market? This is the key variable that determines whether risk assets can continue the bull market.

Take a look at how the big banks bet:
Bank of America expects the Fed to buy 45 billion short-term Treasury bills per month (within a year) starting in January next year;
Pioneer Pilot believes that the action will be later, and may not be launched until the end of the first quarter or the beginning of the second quarter of next year, with a scale of between 15 billion and 20 billion yuan per month.

The market logic has actually switched - in the past, everyone was focused on the pace of interest rate cuts, but now it depends on the intensity of water injection. Buying bonds is to expand the balance sheet, and expanding the balance sheet is to release liquidity, which is more direct than a few basis points lower.

Interestingly, the time difference is: Bank of America will start in January, and Vanguard Pilot feels that it will have to wait a few months. This divergence in expectations is precisely the window of opportunity for volatility trading.