NY Fed statement regarding Open Market Desk Operations
|In response to increasingly dysfunctional markets, the Federal Reserve moved in on Thursday and put up a massive liquidity injection to try and bring some calm. Under direction from Fed Chair Jerome Powell and the broader FOMC, The NY Fed stepped in with a US$1.5 trillion liquidity injection and wider Treasury purchases.
NY Fed Statement regarding Open Market Desk Operations on Thursday April 9, 2020:
Due to the Securities Industry and Financial Markets Association’s recommended market close on Friday, April 10, 2020, all overnight repurchase and reverse repurchase agreements and securities lending trades executed on Thursday, April 9 will mature on Monday, April 13, 2020. Additionally, any Treasury security purchases executed on Thursday, April 9 will settle on Monday, April 13, 2020. While the Open Market Trading Desk does not intend to conduct operations on April 10, the Fedwire Securities Service will operate during its regular hours on that date.
FX implications
This is giving the market a hint that we are now in QE4 territory ahead of next week's interest rate decision. The action today opens the door for a 100bp cut to 0-0.25% between now and April's meeting and hence the US dollar is lower.
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