Fx trading news: The Federal Reserve offers heavy tools to support ticket financing, US stocks soar, Nasdaq soars 5%, and US dollars rush to 100!
2020-03-18 11:54 from：CAPSTONE author：Jack
Capstone forex trading news: On Tuesday (March 17), the Federal Reserve announced that it would establish a commercial paper financing mechanism to support credit flows to households and businesses. After the news came, the financial market was very encouraged. The US dollar index continued its previous rally and refreshed to a daily high of 99.78. Spot gold stood at the US $ 1,550 / ounce mark and pulled up to US $ 90 since the low. Pulling up, of which the Nasdaq rose more than 5%, European stock markets and FTSE China A50 index futures also climbed.
The Federal Reserve will establish a commercial paper financing mechanism to help companies that have difficulty obtaining funds. The Federal Reserve said on Tuesday that it will help companies that struggle to get the short-term funding needed to operate.
The Federal Reserve announced a special credit arrangement to buy corporate notes from issuers who have difficulty finding buyers in the open market, a move that is highly anticipated on Wall Street. Corporate bills involve unsecured short-term loans.
The Federal Reserve said that the commercial paper market has been under "a considerable amount of pressure" recently due to the epidemic. Commercial paper financing mechanisms will be established to support credit flows to households and businesses. This mechanism should be able to eliminate market risks and improve the ability of enterprises to maintain employment and investment during the outbreak.
The Fed said that the Treasury will provide the Fed with $ 10 billion in credit protection, and these funds will come from the Treasury ’s foreign exchange stabilization fund.
Former Fed director Randall Kroszner said in an interview with CNBC: "This is a key market, basically a market for short-term corporate borrowing. If you do not get this short-term borrowing, you cannot get funds , Ca n’t pay employees, and customers ca n’t. ”
"If it all freezes, then there really is something wrong."
During the financial crisis of 2008, the market did freeze, and the Fed's task was to find a way to get the market back to work.
The one-day bond issuance announced on Tuesday complies with the emergency powers of the Federal Reserve Act and will provide eligible companies with three-month bonds. The cost will be the 3-month overnight index swap rate plus 200 points.
To raise funds, the New York Fed created a so-called special purpose agency, guaranteed by the Treasury Department at $ 10 billion.
At the same time, the Fed has also taken several other radical policy actions in recent days.
The most striking thing is that the Federal Reserve lowered the benchmark borrowing rate to a level close to zero in an emergency measure announced on Sunday local time. The Fed also said on the same day that it would buy another $ 700 billion in US Treasury bonds and mortgage-backed securities.
On Monday and Tuesday, the Federal Reserve also announced that it would further inject capital into the overnight lending market, that is, the repo market where banks conduct short-term financing operations.
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