The federal reserve has just announced they are offering $500 billion to banks for one month borrowing and half a billion for three months short term borrowing.
“Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020,” they said before further adding:
“Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement.
Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule.
The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.
These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak. Reserve management purchases into the second quarter will continue to be conducted with this maturity allocation.
The terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation.”
This comes a day after Trump met bankers who were clear in their offer to help individuals or businesses amid a global crisis as the world faces a pandemic.
Dow reacted somewhat by gaining 4% to now -6% for the day, but it’s unclear whether investors will judge this as sufficient.