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QEternity! Fed Signals Unlimited QE, Adds Aid for Companies, Municipalities

In the wake of House Speaker Pelosi’s obstruction of the nearly $2 trillion stimulus bill, The Federal Reserve is uttering “Once more unto the breach, dear friends!”

(Bloomberg) — The Federal Reserve on Monday announced a massive second wave of initiatives to support a shuttered U.S. economy, including buying an unlimited amount of bonds to keep borrowing costs low and setting up programs to ensure credit flows to corporations and state and local governments.

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The Fed will buy Treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy,” and will also buy agency commercial mortgage-backed securities (aka multifamily), according to a statement. The Fed had said a week ago it would buy at least $500 billion of Treasuries and $200 billion of agency MBS.

Under the new programs the Fed will take on a slew of efforts, many aimed at directly aiding employers and households, as well as cities and states.

The Fed will support “the flow of credit to employers, consumers and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing.” It will be backed by $30 billion from the Treasury’s Exchange Stabilization Fund.

On the news of QEternity, the US Treasury 10 year yield dropped.

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And the Dow mini rose from down almost 500 to down only 103 as of 8:17am.

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Let’s see what happens at 9:30am!

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