Coronavirus emergency: Fed cuts rates, but markets expect more

Monday 09 March 2020

Market volatility and liquidity concerns have likely been the trigger for the emergency cut. The market reaction has been a sell-off in equities, while the 10-year Treasury yield touched new lows, as the Fed move is perceived as not being enough to offset recent deterioration in financial conditions due to the market reaction to the coronavirus outbreak. Markets still expect more.

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The cut and the market reaction: In the first intra-meeting ease since the 2008 crisis, the Fed delivered a 50 basis-point rate cut

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