St. Louis Fed President James Bullard says that unemployment insurance should cover close to or 100% of Americans' lost pay. "It has become clear that our economy will face severe disruptions". The Fed last week restarted financial crisis-era programs to help the commercial paper and money markets, after cutting interest rates to near zero and pledging to boost its holdings of Treasuries by at least $500 billion and of mortgage securities by at least $200 billion.
"Our nation's first priority is to care for those afflicted and to limit the further spread of the virus, the Fed statement on Monday said".
The Federal Reserve also established the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) as facilities to support large employer credit in both the primary and secondary markets.
The index jumped by 452.12 points, beating the previous record of 431 points, following weeks of struggles as the United Kingdom fights the huge economic impact from the COVID-19 outbreak.
Similar massive falls in the so-called Purchasing Managers Index (PMI) were also largely ignored by investors in other countries. "We are trying to provide as much support as we can to that market". But because of the harsh and accelerated impact of the virus to businesses of all sizes, many have called on the Fed to re-think the use of its toolkit, which has historically targeted the banking and finance industries.
This includes a combination of programmes that add $300bn in new financing to employers, consumers and businesses underpinned by $30bn in equity from the Department of the Treasury. The SMCCF will purchase investment-grade corporate bonds of USA companies and select US -listed exchange-traded funds.
Under the Fed's authority granted by Section 13 (3) of the Federal Reserve Act, the central bank then lends to the SPV to support the vehicle's purchases.
They are reinstating the Term Asset-Backed Securities Loan Facility (TALF) to promote credit to consumers and businesses.
The New York Fed will lend to a "special goal vehicle", which will then buy bonds and issue loans to companies.
Furthermore, the spot markets opened in the negative territory despite the Fed's announcement. The next scheduled FOMC meeting is April 29.