The Fed is following Tompall Glaser’s advice: “Throw Another Log On The Fire.”
(Bloomberg) — The U.S. Federal Reserve delivered an emergency half-percentage point interest rate cut Tuesday in a bid to protect the longest-ever economic expansion from the spreading coronavirus.
“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point.”
U.S. stocks briefly reversed earlier declines before resuming their selloff, while the 10-year Treasury yield touched 1.09%. Fed funds futures are pricing more than a percentage point of central bank rate reductions for 2020, including another quarter-point cut in the first half of the year.
Stocks quickly reacted to the additional log on the fire.
The 10-year Treasury yield fell to 1.082% on the news.
The asset bubble keeps on roarin’!
So, its paradise by The Federal Reserve light. Or torch.