The NY Fed's moves briefly improved the mood on Wall Street, lifting US stocks off their lows during an historic selloff. Boockvar said there was a "blow out" in the gap between bid and offer in Treasuries, signaling a liquidity crunch in what is normally a very deep market. Thats led to a surge in spending on physical goodsespecially cars, exercise equipment, and other durable goodsas well as home renovations. Clean Slate 91 photos Curated by Sarah Thompson. That means the Fed will start buying longer-term debt, just like it did during QE1, QE2 and QE3.
Browse premium images on iStock 20 off at iStock. The Fed said the dramatic moves will address "highly unusual disruptions" in the Treasury market linked to the coronavirus outbreak. We don't want companies to feel like banks will pull back on their lines of credit and run into liquidity problems.". Even though Treasuries are supposed to be the safest assets on the planet, liquidity dried up in that market, setting off alarm bells on Wall Street.
The coronavirus has kept Americans home and pushed the federal government to distribute almost 1 trillion in income support. But the combination of government checks and the threat of the virus has also been responsible for a massive increase in the household saving rate. "This is a full-blown crisis response operation, intended to make it abundantly clear that the Fed will not allow liquidity to dry up Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Thursday note to clients. "QE4 is here Pantheon's Shepherdson said. The NY Fed announced plans Thursday to inject vast amounts of money into the financial system, totaling at least.5 trillion. One way to look at it: The bond-trading engine seized up, and the Fed added oil to make it run smoothly again.