NY Fed to Buy a Range of Treasurys to Try to Ease Jitters

NY Fed to Buy a Range of Treasurys to Try to Ease Jitters
Traders Edward Curran (L) and Jonathan Mueller work on the floor of the New York Stock Exchange, N.Y., on March 12, 2020. Richard Drew/AP Photo
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The Federal Reserve will sharply increase its purchases of short-term U.S. Treasury bonds to try to ease anxiety and disruptions in the financial markets over the coronavirus outbreak.

The Fed announced on March 12 that it’s injecting up to $2 trillion into short-term lending markets as a way to ensure that the Treasury bond market can function smoothly. It’s also broadening its ongoing $60 billion-a-month purchases of Treasurys to include longer-term bonds. Combined, the Fed’s actions led the stock market to sharply pare its losses. At first, it caused Treasury yields to fall before they rose back up again.