NEW YORK - The Federal Reserve’s whatever-it-takes approach to stave off economic calamity has kept interest rates near zero and helped drive U.S. stocks back to pre-pandemic record levels, while weakening the usual dynamic between safe-haven U.S. Treasuries and riskier equities.
The recent rise in Treasury prices, which typically climb when investors seek safe harbors during uncertain times, appears at odds with the exuberance seen on Wall Street, where the S&P 500 last week came within 3.5% of its February all-time high, set before it was clear the spread of COVID-19 would wreak havoc around the world.
That relationship has broken down at times during the pandemic. For instance, since mid-June, U.S. benchmark 10-year yields have fallen more than 20 basis points, while the S&P 500 has gained roughly 5%. The Fed slashed the fed funds rates to near zero in March and launched lending and unprecedented debt purchasing programs to boost liquidity and stabilize financial markets.
With U.S. central bank officials resisting negative interest rates, Fed officials have talked about yield curve control as a way to target rates at specific maturities, which should keep borrowing costs ultra-low to spur spending and bolster the economy.
Since they are propping up the markets .... it allows the rich to say cut unemployment , keep stimulus checks low because they are all set... the rich are all set ... screw the people
The Fed can't do much more to stimulate the economy, because the virus is still raging relatively unchecked. The Fed can pump the stock market more - which seems to be their primary goal - satisfy Trump. Fed has lost its independence and looks more like PBOC now.
This is certainly better than doing nothing, but let's not lose sight on who this really helps and who it doesn't.
nice
Why?