Fed Surprise 50 BP Rate Cut

10:36 a.m. ET

We’re going through historic times at this very moment.

At 10 a.m. the Federal Reserve announced an emergency 50 basis point rate cut, the one markets priced in last week, which was met with a spike in equities. However, the market has not been able to sustain that move, returning to little changed. Fed Chairman Jay Powell will hold a press conference to discuss the emergency cut at 11:00 ET.

On a side note, demand for repo liquidity this morning was the highest since the repo program began… these pressures were supposed to be contained months ago.

Other reactions… The U.S. Dollar dropped like a rock…

US Dollar Index (1m)

And precious metals jumped…

GLD (5m)

Risk assets and yields, however, are much more choppy and mixed…

SP-500 (1m) and 10-year yield (blue)

The major averages are mixed near unchanged ahead of Powell’s presser at 11 a.m.Small Caps are showing some relative strength. Also notable relative strength in defensive sectors again,  Industrials and Transports. On the weak side- Energy and Financials.

Policy statement…

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.

In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent.

The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”