Suspended Economic Activity Leads to another Market Sell-off

Market Recap Week ending 3/2020

A sea of red-painted trade monitors on wall street last week as investors tried to price assets impacted by a halt in economic activity.  Global central banks eased monetary policies and ramped up quantitative easing programs to provide liquidity to the markets.  Fiscal policy from governments also started to take form.  For the week the S&P 500 fell 15%, the Dow lost 17.3, the NASDAQ shed 12.6%, and the Russell 2000 gave back 16.2%.  Shorter tenured US Treasuries offered some cover; the 2-year note yield fell fourteen basis points to close at 0.37%.  The 10-year bond yield increased two basis points to close at 0.97%.  Gold fell 2.1% to close at $1484.60 an Oz.  Oil plummeted in very volatile trade, losing 24.3% for the week to close at $23.73 a barrel. 

The Federal Reserve pulled out a few bazookas to help provide liquidity to strained parts of the market.  In a preemptive move, the Fed on Sunday announced that they would lower their target rate range to 0-.25%.  Additionally, Fed Chairman, Powell announced that the Fed would purchase 500 billion in US Treasuries and another 200 billion in US Agency debt.  The central bank also increased daily Repo operations and provided a trillion-dollar backstop for the Commercial Paper and Money Market funds.  The Fed also coordinated with other global central banks to increase funding to US dollar Swap lines. 

On the Fiscal side of things, the US government approved an 8.3-billion-dollar relief package that includes unemployment and sick leave benefits. FHFA has suspended foreclosures and eviction notices for 60 days.  Additionally, Congress is in negotiations on another package that will likely be over a trillion dollars that will provide direct payments to Americans and to help aid companies and industries in distress.