These Charts Show How Markets Are Reacting to the Fed Bazooka

Treasuries surged, U.S. equity futures tumbled and currencies swung as traders gauged the likely impact of the Fed action.

Cormac Mullen

16 Mar 2020, 03:41 PM IST

These Charts Show How Markets Are Reacting to the Fed Bazooka

A monitor displays stock market information on the floor of the New York Stock Exchange in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) --

The massive emergency move by the Federal Reserve to blunt the economic impact of the rapidly spreading coronavirus sent a now-familiar surge of volatility through financial markets Monday.

Treasuries surged, U.S. equity futures tumbled and currencies swung as traders gauged the likely impact of the action across asset classes.

Here’s a look at some of the main moves:

Bonds

Treasuries surged with the 10-year yield dropping over 30 basis points to 0.63% Monday, still well above last week’s record low of 0.31%. For some analysts, the Fed’s emergency move over the weekend points to fresh all-time lows in Treasury rates ahead.

Stocks

After U.S. shares surged over 9% on Friday, S&P 500 futures slumped in Asia trading Monday, quickly falling limit down. The contracts remain in bear-market territory, down about 25% from their February peak.

Asia Stocks

While U.S. futures, Australian and New Zealand stocks all slid in early Asia trading Monday, Japanese shares outperformed. Traders are waiting to hear what the Bank of Japan has in store after it said it was bringing forward to Monday a policy meeting scheduled for later this week.

Currencies

The dollar fell against most Group-of-10 peers and the yen pushed higher. The Australian dollar whipsawed as the Fed move came after an emergency rate cut in neighboring New Zealand.

Volatility

Volatility pushed higher, with April futures on the Cboe Volatility Index rising as much as 7 points to 51. They’ve mostly traded above the 40-point level for the past six sessions.

Oil

Oil retreated as investors weighed the impact of central bank stimulus against the hit to demand from the coronavirus outbreak. West Texas crude oil futures fell as much as 6% before paring losses.

To contact the reporter on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger, Adam Haigh