The Federal Reserve announced on Wednesday that they have mandated negative interest rates in an attempt to stimulate market activity.
The yield on one-month and three-month Treasury bills fell below zero on Wednesday. This is the first time this has happened in over 4½ years.
“This is part and parcel of the whole flight to quality thing,” said Kim Rupert, managing director of global fixed income at Action Economics, to CNBC.
“They’re obviously the most liquid instrument. We saw a lot of selling pressure a few days ago when everyone was selling everything to get cash. But with all the plans the Fed has introduced, the bill market is much safer,” he added.
Trending: Why Substack Matters
Rupert believes that this is just the beginning and the Fed will drive interest rates even lower from this point forward.
“There’s no telling anymore in this environment. They could spread,” Rupert said. “Everyone is expecting the Fed to be lower for longer, and I mean longer. The whole bias is for yields to go lower. I would not rule out the front end of the curve going negative.”
After historic and sustained losses, the Dow Jones has rebounded following unprecedented market interventions. They posted a 2,112 point gain on Tuesday with news that an incredible $2 trillion stimulus was set to be passed by Congress. The market gained an additional 500 points on Wednesday despite a volatile day of trading.
Liberty Conservative News has reported on the trillions of stimulus that have already been created by the Fed to paper over the sagging economy:
“On Tuesday, the Federal Reserve injected another $500 billion into the economy to prop up Wall Street amidst coronavirus panic.
“This action is taken to ensure that the supply of reserves remains ample and to support the smooth functioning of short-term U.S. dollar funding markets,” the Fed’s said in a statement released on Tuesday.
The big banks are saying that much more stimulus will need to occur to keep markets afloat following a Monday that was the worst day for Wall Street since 1987. Corporate giant Bank of America is saying that the Fed may need to start a commercial paper lending facility similar to what they did in 2008 to lubricate the “frozen” market…
A massive recession, or perhaps even depression, may be in order because of the Fed’s reckless actions, as they global prosperity in jeopardy to keep Wall Street’s rigged ponzi scheme propped up a little while longer.”
The central bank has exploited the coronavirus pandemic as an excuse to gain an even bigger stake in the world economy.