US stock prices are at record highs and credit spreads near record lows amid hopes and prayers for the v-shaped recovery which has already sent US macro surprise data soaring.
But, it appears The Fed is not buying the bounce and feels like the “economy” needs help a “little” longer, extended most of its emergency lending programs by three months, through the remainder of 2020.
The Federal Reserve Board on Tuesday announced an extension through December 31 of its lending facilities that were scheduled to expire on or around September 30. The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic.
The Board’s lending facilities have provided a critical backstop, stabilizing and substantially improving market functioning and enhancing the flow of credit to households, businesses, and state and local governments. Each facility was created under section 13(3) of the Federal Reserve Act with the approval of the Treasury Secretary.
The extensions apply to the Primary Dealer Credit Facility, the Money Market Mutual Fund Liquidity Facility, the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Term Asset-Backed Securities Loan Facility, the Paycheck Protection Program Liquidity Facility, and the Main Street Lending Program. The Municipal Liquidity Facility is already set to expire on December 31, with the Commercial Paper Funding Facility set to expire on March 17, 2021.
Further details on each can be found here.
And since these programs are as permanent as death and taxes, no matter the claims from Powell and the Fed to the contrary, expect many more “3 month extensions” from now until the day the USD loses its reserve status …
…despite record high stock prices and near record low credit spreads.
Full report: https://www.federalreserve.gov/covid-19.htm