Bellevue Perspectives

Monday Minute

  • The White House last week announced they will be seeking up to $1 Trillion in stimulus to backstop the economy as commerce continues to shut down.  President Trump mentioned the airline industry specifically, as well as getting cash to strapped consumers.  The news temporarily provided a boost to the markets on Tuesday. Congress struggles over the weekend to get it passed. Now looks like end of week thanks to the partisan bickering.
  • Just before midnight Wednesday, the European Central Bank unveiled a massive 750 billion-euro ($820 billion) emergency bond-buying program dubbed the Pandemic Emergency Purchase Program. The program comes on top of monthly purchases of 20 billion euros that were launched late last year, as well as a 120 billion-euro package announced last week, bringing the total to more than 1 trillion euros for at least the rest of 2020. This means monthly purchases will exceed the 80 billion euros spent at the height of the eurozone debt crisis.  Bank of England also ramps up bond buying and cuts rates to near zero.
  • The Federal Reserve announced today that it is reaching into its bag of tricks to help with liquidity and try to bring some calm to an unstable situation.  They committed to continue to expand their balance sheet “as necessary”, which includes corporate bond and agency commercial mortgage-backed securities purchases, and new lending programs for employers, consumers, and businesses.  We are now essentially in an open-ended commitment to Quantitative Easing, QE.  This won’t fix the virus, but should help bring some stability to the bond market.

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