If the Fed continues to aggressively sell off Treasuries, how can the government's borrowing costs not skyrocket? Hitting the brakes now is actually giving the Treasury a buffer.

For the market, this is a strong short-term boost. The tightest liquidity period is finally over, and risk assets can breathe a little easier for now.

But don’t pop the champagne just yet—the balance sheet is still nearly $2 trillion larger than it was before the pandemic. In other words, not much liquidity has actually been drained from the market.