The U.S. government has officially reopened after a 43-day shutdown, and the financial world is now preparing for major shifts. Macro analyst Raoul Pal believes the reopening will unleash a powerful liquidity wave that could reshape markets, interest rates, global spending, and even the future of crypto. Pal outlines how government action, central-bank policies, and international stimulus may converge in the months ahead.
According to Pal, the first major change will come from the Treasury General Account (TGA). With the government back in operation, TGA spending will resume and steadily inject liquidity into the markets. He expects this inflow to continue for several months, providing additional support to the economy.
At the same time, the Federal Reserve is preparing to end Quantitative Tightening in December. Once QT stops, the Fed’s balance sheet will stop contracting and begin expanding again, naturally adding more liquidity to the system. As liquidity rises, Pal anticipates a weakening of the U.S. dollar a typical reaction when money supply increases.
Pal warns that the next challenge will be avoiding a year-end funding squeeze, which often puts pressure on banks. To mitigate this risk, he expects regulators to deploy temporary liquidity tools such as Term Funding programs and Standing Repo Facility (SRF) operations to maintain smooth cash flow.
He also predicts that these short-term measures will pave the way for larger structural changes. In early Q1, Pal expects adjustments to the Supplementary Leverage Ratio (SLR), which would allow banks to hold more bonds and expand their balance sheets. He describes this as a “liquidity bazooka” that could also drive interest rates lower.
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Globally, Pal highlights that China continues to expand its balance sheet, while Europe is preparing additional fiscal stimulus. In the U.S., new stimulus payments and increased spending under the “Big Beautiful Bill” are also likely, especially with mid-term elections approaching.
On the crypto front, Pal believes the U.S. is nearing the final stages of the CLARITY Act — a key bill that would establish a clear regulatory framework for digital assets.
Despite rising liquidity expectations, Federal Reserve officials remain divided on the December interest-rate decision. Some policymakers, including Governor Stephen Miran, support a 50-basis-point cut, arguing that halting rate reductions could hinder economic progress. Others, such as long-time rate-cut advocate Mary Daly, are undecided for the first time due to mixed economic data. Minneapolis Fed President Neel Kashkari is also uncertain.
Amid this uncertainty, the crypto market has softened, with Bitcoin dropping below $100,000 and several altcoins pulling back. All eyes are now on the December 10 FOMC meeting, where the final rate-cut decision will set the tone for markets heading into the new year.
