Coronavirus: Federal Reserve unveils ‘bazooka’ programs to backstop USA economy

Federal Reserve details new steps to stabilize economy amid coronavirus crisis

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 by 1.9 per cent and Japan's Nikkei by 4.9 per cent.

The Federal Reserve on Monday announced a massive second wave of initiatives to support a shuttered US economy, including buying an unlimited amount of bonds to keep borrowing costs low and setting up programs to ensure credit flows to corporations and state and local governments.

"Our markets are fully capable of operating in an all-electronic fashion to serve all participants, and we will proceed in that manner until we can re-open our trading floors to our members", NYSE President Stacey Cunningham said as she announced the closure in a statement last Wednesday.

The most surprising of the Fed's announcements is its determination to buy as many debt bonds as necessary to calm the market, including high-risk investment bonds.

But analysts worry it is going to do little to offset the near-term economic harm accomplished by mass lockdowns and layoffs.

The euro was last up 0.98% against the greenback at US$1.0799.

Goldman Sachs warned the USA economic development may contract by 24% within the second quarter, two-and-a-half instances as massive because the earlier postwar document.

The U.S. economy is now suffering from three material economic shocks, as global trade disruptions, mandated domestic business closures, and disruptions in lending from severe financial market stress will contribute to a large contraction in U.S. economic activity in 2Q.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

The move comes as plans for a government bailout have stalled in Washington.

The logjam combined with the stimulus splash from the Fed to take a little of the shine off the USA dollar, though it remains in demand as a global store of liquidity.

On Monday, the Fed announced unprecedented actions which did just that.

"The special role of the United States dollars in the world's financial system - it is used globally in a range of transactions such as commodity pricing, bond issuance and global bank lending - means USD liquidity is at a premium", said CBA economist Joseph Capurso.

"Whereas liquidity is a matter, the Dollars will stay sturdy".

The greenback index stood at 102.120 =USD, off a three-year peak of 102.99.

Oil costs additionally bounced after current savage losses, with USA crude CLc1 up 64 cents at $24.00 barrel.



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