Fed to the Rescue!

“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 one-half percentage point.” This statement was just released by the Fed and constitutes a rare condition of a rate move without a meeting. This move puts the new Fed Funds Target Range between 1% and 1.25%. This pushes the “real” inflation-adjusted rate into slightly negative territory; indicative of high monetary accommodation. Bond prices have shown little reaction in the few minutes since the announcement; Ten-Year yield is around 1.10%, Two’s are around 0.80% and the Long Bond rests at a lofty 1.69%. The DJIA is behaving erratically and is down around 150 points at the moment. Geez, what do equity investors want?!