The Fed's rate cut is already an open secret, but the real bull market code may be hidden in the balance sheet.

[Bitpush] Last week, US stocks hit another all-time high, and the market is betting that the Fed will continue to cut rates. But to be honest, the real point of interest this time might not be the interest rate itself—but how the Fed plans to handle its $8 trillion balance sheet.

Now that quantitative tightening has hit the pause button, will the Fed start injecting liquidity into the market? That’s the real key to whether this bull market can keep going.

A global bank’s rates team made an aggressive prediction: starting in January, the Fed might buy $45 billion in short-term Treasury bills (one year or less) every month, nominally for “reserve management,” but essentially injecting liquidity in disguise.

However, some conservatives think it won’t happen so soon. Vanguard’s head of fixed income estimates we’ll have to wait until the end of Q1 or Q2 next year, and the scale may only be $15-20 billion per month—a 30% haircut.

As for interest rates, there’s not much suspense: there’s a high probability of another 25 basis point cut on December 10, bringing the policy rate down to a 3.5%-3.75% range, moving closer to the “neutral rate” of 3%. After all, the goal now is a soft landing for the economy, not slamming on the brakes.

So the fuel for this rally may not be the interest rate, but how wide the liquidity faucet is turned on.