U.S. stocks parred some losses Thursday after the Federal Reserve said it will put a chunk of cash into the bond market to keep financial conditions easy, as the coronavirus threatens to throw an otherwise stable economy into recession.
All three major U.S. stocks indexes were down more than 8% at one point on Thursday, before the New York Fed announced it will inject $500 billion of cash into the treasury market, buying securities across the duration scale to keep interest rates low and banks flush with cash. Other reports also say $1.5 trillion of cash will pump into short-term funding armrest specifically.
By 1:00 pm, the major indexes were only down 4%, before move back down to a worse than 5% loss.
The 10 year treasury yield, which has already been below the Federal funds rate of now 1% for a while, only fell to 0.72%. The 3 month yield was at 0.2%, with the 30 year at 1.2%.
Many note that stimulus can’t get consumer nervous about getting Coronavirus outside and shopping. It can’t get manufacturing plants up and running — workers don’t want to get sick. But it is supposed to keep banks prepared for a recession, which seems more likely by the day and it can pad a recovery when the virus ever contained.
TheStreet will be breaking down what is now a bear market. Stay tuned.
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