Recently, there has been a particularly confusing issue in the market that is worth clarifying.

Last week, the Federal Reserve launched the Reserve Management Purchase operation (RMP), and as a result, many people started speculating—"Is this QE coming back?" "Is the era of liquidity expansion reopening?"—but this logic is actually misguided. It must be stated plainly: these two are completely different things. Confusing them will lead to fatal biases in your market judgment.

How to understand this? An everyday analogy is the clearest. Imagine your residential community has a water reservoir. Due to high water usage and seasonal evaporation, the water level gradually drops. The property management notices this and decides to open the refill pipeline to keep the reservoir at a stable operating level. This refill operation—that's RMP. Its purpose is very specific: to maintain normal system flow and prevent supply shortages.

Conversely, what is QE? It’s like the community suddenly faces a severe water shortage crisis. The property management not only opens all pipelines but also calls in emergency water reserves and mobilizes social resources to respond. This is a non-standard crisis rescue measure.

The core difference lies here: RMP is a routine maintenance operation, while QE is an extraordinary emergency measure. The former aims to keep the interest rate market functioning smoothly, while the latter is a genuine economic stimulus policy. When you see the words "balance sheet expansion," it’s easy to get excited, but in reality, the concepts are confused. The purpose of policy implementation, scale, and market impact are completely different.

When trading and making judgments, never overlook this distinction.