Fed launches more measures to support the economy and transmission of monetary policy
- Will buy Treasuries, MBS in the amounts needed to ensure smooth market functioning and transmission of monetary policy
- Establishes two new facilities for lage employers
- One facility is for new bond, loan issuance; one is for outstanding corporate bonds
- Establishes term asset-backed loan facility (TALF)
- TALF backed by student, auto, credit card and SBA-backed loans among other assets
- Will soon announce 'main street business lending program' to support SMEs
- Daily and term repo rates to be reset to offering rate of 0%
For starters, the Fed will purchase $75 billion of Treasuries and $50 billion of agency MBS each day this week. The Fed is practically going to reach the point where they will be buying everything in the market at this stage. The full press release can be found here.
Treasury yields have fallen sharply on the back of the announcement here with 10-year yields dragged to 0.72% from 0.80% earlier.
Meanwhile, USD/JPY has eased from 110.80 to 110.12 currently.
