Sunday afternoon, before the futures markets opened, the Fed panicked and lowered the Federal Funds Rate to 0.00%-0.25%, announced a $700 billion Quantitative Easing program, cut reserve requirements to 0%, boosted intraday liquidity, and announced coordinated currency swap lines with other central banks. The Fed will purchase at least $500 billion in U.S. Treasury securities and $200 billion of Mortgage-Backed Securities.
The overnight U.S. equity futures market responded by crashing lower to its limit-lock down level where the futures market closed for the rest of the night. Treasury yields fell in overnight trading. Stocks opened the day and immediately tripped the circuit breaker, which closed the markets for 15 minutes after which equities rallied in early trading while Treasury yields held their overnight decline.
The New York Empire State Manufacturing Index crashed hard into recessionary territory in March, which includes data from February, by falling from 12.90 to -21.50.
Stocks couldn’t hold on to their early morning ramp after President Trump appeared to be focused on containing the Conoravirus instead of pumping stock prices higher. Treasury yields fell as Friday’s bond purchase program by the Fed settled. Yields are expected to fall again tomorrow after the Fed purchased $40 billion of Treasury securities and begins buying down the Federal Funds Rate.