in , , , , , , , ,

The Fed Injects $1.5 Trillion Into Economy to Attempt to Prop Up Crashing Markets

As stocks headed for their worst day since 1987’s Black Monday Crash, the Federal Reserve announced further measures to prop up liquidity including a potential injection of more than $1.5 trillion into the market; stocks responded immediately, cutting losses in half on the announcement, before dropping back down 8%.

  • The Fed said it will ramp up its overnight funding operations—buying “repos,” or repurchase agreements—by $1.5 trillion over the next two days.
  • “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 on Thursday afternoon.
  • The Fed also widened the range for its reserve management purchases—which had previously been restricted to short-term Treasury bills—to include other types of financial instruments.
  • The moves are designed to preserve liquidity in the market; in other words, the Fed wants to prevent “freezes” and make sure buyers and sellers still have the ability to trade.
  • It’s the third time in four days the New York Fed has announced that it will bulk up lending in the repo market: on Tuesday, it announced an injection of $50 billion, and it added another $25 billion on Wednesday.
  • Stocks initially pared back nearly half their losses on the announcement, but within the hour had dropped back close to their previous daily lows; at 2:00 p.m. EST on Thursday, the Dow Jones Industrial Average was down 8%.


What do you think?


Leave a Reply





Dow Plunges Over 9%, Losing over -2,000 Points

Netflix Suspends Production On Movies & Tv Shows Amid Coronavirus

Netflix Suspends Production On Movies & Tv Shows Amid Coronavirus