The Federal Reserve has stepped into financial markets for the second day in a row and the third time this week, this time dramatically ramping up asset purchases amid the turmoil created by the coronavirus.
"These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak," the New York Fed said in a statement released early Thursday afternoon amid a washout on Wall Street that was heading toward the worst day since 1987.
Stocks were off their lows following the announcement though some of the gains were pared as the market digested the moves.
One part of the announcement saw the Fed widen the scale for its $60 billion worth of money Treasury purchases, which to now had been confined to short-term T-bills.
Under the new regime, the Fed will extend its purchases "across a range of maturities" to include bills, notes, Treasury Inflation-Protected Securities and other instruments. The central bank will begin purchasing coupon-bearing securities, something market participants have been clamoring for since late 2019.
The purchases start Thursday and will continue through April 13.
The second part of the new operations will see the New York Fed desk offer $500 billion in a three-month repo operation and a one-month operation. The offerings will happen on a weekly basis through the remainder of the program.
In addition, the Fed will continue to offer at least $175 billion in overnight repos and $45 billion in two-week operations. Repos are short-term operations in which financial institutions provide high-quality collateral in exchange for cash reserves they use to operate.
The extraordinary moves come amid extreme market turmoil created by uncertainty over the coronavirus spread. Government bond yields earlier this week cascaded to record lows amid reports of liquidity issues in the market and fears of a global recession.
Markets have been looking for action by the Fed, which instituted an inter-meeting interest rate cut last week that did nothing to quell concerns. The Fed on Monday increased the limits for its ongoing repo operations, then Wednesday expanded the limits an announced a $50 bill term offering that attracted heavy interest earlier in the day Thursday.
This is a developing story. Check back for updates.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
https://news.google.com/__i/rss/rd/articles/CBMihgFodHRwczovL3d3dy5jbmJjLmNvbS8yMDIwLzAzLzEyL2ZlZC10by1wdW1wLW1vcmUtdGhhbi01MDAtYmlsbGlvbi1pbnRvLXNob3J0LXRlcm0tYmFuay1mdW5kaW5nLWV4cGFuZC10eXBlcy1vZi1zZWN1cml0eS1wdXJjaGFzZXMuaHRtbNIBigFodHRwczovL3d3dy5jbmJjLmNvbS9hbXAvMjAyMC8wMy8xMi9mZWQtdG8tcHVtcC1tb3JlLXRoYW4tNTAwLWJpbGxpb24taW50by1zaG9ydC10ZXJtLWJhbmstZnVuZGluZy1leHBhbmQtdHlwZXMtb2Ytc2VjdXJpdHktcHVyY2hhc2VzLmh0bWw?oc=5
2020-03-12 17:21:37Z
52780661410778
Bagikan Berita Ini
0 Response to "Fed to pump more than $1 trillion in dramatic ramping up of market intervention - CNBC"
Post a Comment