At least one quarter-point cut is coming on March 18, as Powell signals Fed Ready to Cut Rates Despite Doubt They Can Fix Virus Fallout.
Fed Chairman Jerome Powell opened the door to a rate-cut at the Fed’s March 17-18 meeting by issuing a rare statement Friday pledging to “act as appropriate” to support the economy.
Powell’s intervention 90 minutes before the stock market’s close on Friday marked a sharp pivot from the previous message of policy makers that it was way too soon to judge the economic impact of the China-borne epidemic.
“We’re going to get infections here and there for quite a while,” said former International Monetary Fund chief economist Olivier Blanchard, who is now with the Peterson Institute for International Economics in Washington. “The economic cost may be large.”
One Cut or Two?
The only debate now is whether there would be one rate cut or two.
Prior to Powell’s intervention message on Friday, I commented New Record Low Yields on 10- and 30-Year Bonds: Double Cut?
I expect a 50-basis point cut per my Friday point: “A quarter point cut would leave the 10-year treasury yield inverted with the Effective Fed Funds Rate by 16.3 basis points.”
Mike “Mish” Shedlock
“Powell issued a rare inter-meeting statement promising to support U.S. economy (<—delete “economy” and substitute—>)stock market.”
Bond market is having fun tonight.
You can’t push on a string.
The economy is doing just fine. Bottled water and toilet paper were cleared from the shelves, and checkout lines were long.
Is the bottled water to flush the paper in case there’s no tap water? -:)
At least a point cut this week or we will test the 20,000 floor,no rate cut and we will see our first ever 2000 pt drop on Monday even with the PPT buyin up $300-400 billion in equities in one day!!!!!
A 1 point cut won’t do the dollar much good, could start a bigger problem.
LOL, the near 1,300 point rise means that the fed injected close to $1.5 TRILLION not just hundreds of billions.
If the market is falling because interest rates are too high, this should solve it.
Can we list the monetary/financial banking rules of the pre-2008 system that hasn’t been cast aside due to one emergency or another? I believe, the list is very short. The FED/central banks own it all.
In UK the Statute of Marlborough says you can’t ask for your money back (return of damages) in the street ?
How will monetary policy (a.k.a counterfeiting) help supply chain disruption and people’s reluctance to travel? I agree with Peter Schiff: it’s a recipe for inflation.
QE + Hoax will power us through this.
It’s good that the FED has led a prudent monetary policy, and has room to cut. I mean, there is way to go till absolute zero, when everything freezes. /s
QE Infinity in progress.
This will result in more money in the hands of giant corporations, that will use it to buy up the necessities of life at prices nobody else can afford, and then ration them to drive up the prices further. So… business as usual.
The buying operations the Fed started already has started monetizing the debt. This is modern monetary theory by another name.
QE5 will keep us alive
People travelling less, businesses sending people home, sporting events cancelled or postponed, supply chain disruptions, towns sealed off. How will QE help?
Exactly… currency chasing decreasing product. All this currency will go into the financialization funnel at the top and… it’s gone. just like South Park.
Yes, the underlying problem needs to be fixed. The problem will still be there if they cut rates and or use QE & they’d have less ammunition when they need to use it. They should just let the markets do what they want, isn’t that the American way, free markets. Anyway, lower stock prices and higher yields is good for those just starting their careers and wanting to save. Better that they buy fair value rather than inflated prices ramped up because of a perceived one way bet.
People would get restless if the stock market closed.
Did I read they’re doing a disaster test for that very event this week?
“During this test, NYSE will facilitate electronic Core Open and Closing Auctions as if the 11 Wall Street trading floor were unavailable,” Fox
I guess for if physical presence due to nCov is not allowed, or maybe for if no one is interested in stocks anymore they will then have algos ready to keep up the appearance of it still working 😉