Wall Street has recently exploded. The Federal Reserve's announcement of a $40 billion monthly short-term Treasury purchase program seems like a routine "reserve management" operation, but in fact, it has prompted the entire investment banking circle to start a comprehensive adjustment of their forecast models for next year.

Here's what happened: In December this year, the Fed launched this bond-buying plan, with scale and pace exceeding market expectations. Barclays directly raised its 2026 bond purchase forecast from $345 billion to $525 billion, and JPMorgan's prediction also reached $490 billion. How significant is this adjustment? Basically, all major investment banks are re-evaluating their debt issuance strategies simultaneously.

Starting December 12, the Fed first bought $8.2 billion in short-term government bonds as a buffer, then pushed forward with a $40 billion plan over the next month. The goal is clear: to rebuild the reserve levels of the financial system.

The key point is—Fed officials have been emphasizing that this is a technical operation, unrelated to quantitative easing or economic stimulus. But in reality? The reserves within the system have already fallen to an awkward level. The data speaks: the secured overnight financing rate (SOFR) from the New York Fed is now at 3.77%, 12 basis points higher than the interest rate on the Fed's reserve balances. This indicates that short-term financing costs are already climbing.

So, this move by the Fed is less about quantitative easing and more about patching the financial system. But for the market, this signal is strong enough—the landscape of the bond market is quietly changing.