Well, this didn’t go as The Fed hoped!
(Bloomberg) — The Federal Reserve took aggressive steps to ease what it called “temporary disruptions” in Treasuries, flooding the market with liquidity and widening its purchases of U.S. government securities in a measure that recalls the quantitative easing it used during the financial crisis.
The Federal Reserve Bank of New York said in a statement that the “changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak” and had been done at the direction of Fed Chairman Jerome Powell in consultation with the Federal Open Market Committee.
Under the Fed’s existing program to buy $60 billion a month in securities, the purchases will be widened to include coupon-bearing notes across a range of maturities to match the maturity composition of the Treasury market, it said. (or $1.5 TRILLION)
This is really QE 4 with a NOT! added.
The market reacted by saying “Big whoop.”
Today, the Dow dumped 10% or 2,352.33 points.
As the VIX hit 75, the highest since 2008 and the financial crisis.
Powell tried a “Hail Janet” pass … and it went unnoticed.
At least the US Treasury yield curve lost its sag!