Fx trading news: The Federal Reserve's rescue plan is here, and new financing measures are announced!
2020-03-13 14:28 from：CAPSTONE author：Jack
Capstone forex trading news:On Thursday (March 12), the Federal Reserve entered financial markets for the second day in a row, amid a turmoil caused by a corona virus, which significantly increased asset purchases. The New York Federal Reserve issued a statement on the management of Treasury bill reserve purchase and repurchase operations.
The Federal Reserve Bank of New York will conduct repurchase operations and purchase operations. It will conduct a three-month repurchase operation with a size of 500 billion U.S. dollars at 13:30 ET, including bonds of various maturities. outer.
"These changes are in response to a very unusual disruption in the Treasury financing market associated with a corona virus outbreak," the Federal Reserve said in a statement earlier Thursday. The worst day since 1987.
Part of the statement is that the Fed has expanded its $ 60 billion purchase of Treasury bonds, which are currently limited to short-term U.S. Treasuries.
Under the new system, the Fed will expand its purchase range “across various maturities”, including short-term bonds, medium-term bonds, inflation-protected bonds and other instruments. The Fed will begin buying interest-bearing bonds, which market participants have been asking for since the end of 2019.
Purchases start on Thursday and will last until April 13.
The second part of the new operation is that the New York Federal Reserve will provide a three-month repo operation and a one-month repo operation of $ 500 billion, which will be carried out on a weekly basis.
In addition, the Fed will continue to provide at least $ 175 billion in overnight repurchases and $ 45 billion in two-week operations. Repurchase is a short-term operation, and financial institutions provide high-quality collateral in exchange for cash reserves for operations.
Due to the uncertainty of coronavirus transmission, the market has experienced extreme turbulence. Earlier this week, government bond yields fell to record lows due to reports of market liquidity issues and concerns about the global economic downturn.
The market has been expecting the Fed to take action. Last week, the Federal Reserve announced interest rate cuts in the margins of the meeting, but this failed to calm market concerns. The Federal Reserve raised the cap on ongoing repo operations on Monday, raised it again on Wednesday, and announced the issuance of $ 50 fixed-term notes, attracting a lot of interest earlier Thursday.
At the same time, the Fed also promised that "the operating terms will be adjusted as needed to promote the smooth operation of the US Treasury market and the effective implementation of policies."
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