Fed Announces 2nd Emergency Rate Cut

 

The Fed slashed its benchmark rate to near zero. In an attempt to curb the coronavirus impact on the economy, the Fed cut its benchmark rate range to 0% – 0.25% two days prior to the FOMC meeting. In addition, it pledged to buy $500 billion in Treasury and $200 billion in MBS starting today. Chair Jerome Powell said the Fed would leave rates at this low level “until it is confident that the economy has weathered recent events and is on track” at his press conference on Sunday. This is the first time that the Fed has cut rates twice between FOMC meetings. The IMF is willing to use its $1 trillion lending capacity in crisis financing. This move failed to boost sentiment- Treasury yields falling 10-15 basis points across the curve – the US 10-year Treasury yield falling to 0.764%.

 

 

European economies are increasing measures to lessen the spread of the virus. Spain joined Italy in a lockdown that forbids people from leaving their homes without a valid excuse. France closed down all restaurants and bars, while Germany closed down all their borders. Deaths outside China rose to over 3,000 – the WHO viewing the continent the new epicenter of the pandemic.

 

 

Day ahead. The NY Fed’s Empire State manufacturing survey fell well-past economist expectations to -21.5 from February’s 12.9. President Trump and the G7 will discuss a coordinated response to the virus. Shortly after, the White House will holding a virus briefing for the public. President Trump is also scheduled to speak with US governors.