Weekly Bottom Line
- Markets continued to see losses last week as the COVID-19 outbreak intensified. Investors made a dash for cash, resulting in tightening financial conditions.
- The Fed reacted quickly, cutting the target range of the federal funds rate by a full percentage point to 0% to 0.25% as well as pledging to buy $700 billion in treasuries and mortgage-backed securities. It also launched funding programs to improve liquidity and satiate investor demand for cash.
- In addition, Congress was finally able to pass the Phase 2 response to COVID-19. It will need to quickly follow this up with the $1 trillion Phase 3 package to cushion the impending decline of the U.S. economy.
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