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While they are far from going all in, the Federal Reserve just raised a couple of stacks this morning by introducing a slew of new measures to help stem the pressure of the medically induced coma that the US economy has been put into. Among the measures taken, the Fed announced unlimited QE and would purchase $375 billion in Treasuries and $250 billion in mortgage securities this week. Other measures being taken include purchases of MBS securities, corporates, and the launch of three new lending facilities. We’ll have more details later today.
Futures have surged on the news and what was looking like a 3% decline at the open is now looking like a 3% gain. Obviously, that’s encouraging, and while the Fed’s actions are an enormous help, the only way the markets are going to find sustainable improvement is when the economy is allowed to come back to life, or at least there is a real path in place for how that is going to happen. Also, as we have seen repeatedly over the last month, where the market is one minute can be wildly different from where it was a few minutes before.
Read today’s Bespoke Morning Lineup for a discussion of the latest moves in Asian and European markets and the latest coronavirus case counts, including a discussion of some encouraging trends in the state of Washington.
We’ve been showing a number of crazy charts over the last several weeks, and it seems as though with each day that passes they only get more extreme. The chart below showing the 20-day rolling dollar value traded in the S&P 500 ETF (SPY) is another example. Through Friday, this total reached $1.5 trillion, which was up more than five-fold from where it was earlier this year and much higher than any other reading seen throughout the history of the ETF.