Injection of moneyFollowing last years' movement, the Fed has announced that it will inject $200B of Treasury securities under a new Term Securities Lending Facility (TSLF), by expanding its securities lending programme.

The Fed will also increase the swap lines with the ECB and SNB. On one hand, the ECB agreement will increase to up to $30B and on the other hand, rised the Swiss accord to $6B.

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Analysts' Comments

  • · Andrew Brenner, senior vice president at MF Global:
    "The Fed action is significant, well telegraphed and seems to be working. Treasuries are down one point, 2-years have gotten crushed and the 2/10 (curve) has flattened by 8 to 182. Agency spreads are in and mortgages tightening. With $200 billion announced last week this is another $200 billion. With $400 billion in liquidity we are now talking some real coin. We expect stocks to trade higher. Both Fannie and Freddie are already up in pre-market trading. Dollar has improved." - Reuters
  • · Marc Chandler, chief global currency strategist at Brown Brothers Harriman:
    "The news has seen the dollar jump, equities rally and bonds sell-off. Despite reports that the Fed was soon to announce new measures, the market was caught leaning the wrong way. In the bigger picture, is unclear whether this will prove sufficient, but it does demonstrate the Fed's resolve. Although the swap lines and separate announcements by other central banks will cast an air of coordination around today's announcement, the fact is that the ECB and SNB have plenty of dollars to use of their own if they wanted to, which was the point made in Dec by at least one Fed official. Thus it is still a US-led operation." - Reuters
  • · Tom Bentz, analyst at BNP Paribas Commodity Futures Inc:
    "Oil is definitely reacting to the reversal of the dollar, on coordinated central bank liquidity action." - Reuters