The sharp gain in the equity markets this morning was due to the 0.50% rate cut announcement by the Federal Reserve Board. Shortly thereafter, equities quickly turned negative. The concept of a monetary boast to the economy may have been more of a shock to investors. Scarring the sheep is generally not a good idea. It may have been more productive for the Fed to wait until their March 17 scheduled meeting before making any monetary adjustments. Will monetary policy cure the coronavirus? Don’t think so.
The rate cut also drove the 10-year US Treasury yield down below 1% before pulling back up from that historic yield. The drop in yields helped push bond prices up.
George N. Luciani CFP®