Fed Easing Liquidity in Funding Markets - Trading-Lab

OverTheTop · #1 03-11-2008, 03:43 PM

I'm reading the news article which is supposedely taking the markets higher today, but I'm not sure I totally understand it. can anyone explain in laymans's words what is the FED trying to accomplish and why?

http://biz.yahoo.com/ap/080311/fed_credit_crisis.html

AP
Fed Easing Liquidity in Funding Markets
Tuesday March 11, 11:21 am ET
By Jeannine Aversa, AP Economics Writer
Fed Announces Further Steps to Ease Credit Crunch

WASHINGTON (AP) -- The Federal Reserve on Tuesday ramped up efforts to provide more relief to squeezed financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the U.S. economy into its first recession since 2001.

The Fed said it will make up to $200 billion in Treasury securities available to big Wall Street investment houses and banks. The new action is designed to ensure that there is an ample supply of Treasury securities. With strains in financial markets, demand has grown for Treasury securities, considered the safest investment in the world because they are backed by the U.S. government.

On Wall Street, the Fed's action propelled stocks upward. The Dow Jones industrials jumped more than 220 points in morning trading.

The move comes as banks and other financial institutions face cash crunches.

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#1 03-11-2008, 03:43 PM
OverTheTop Member Join Date: Jun 2007 Posts: 46	Fed Easing Liquidity in Funding Markets I'm reading the news article which is supposedely taking the markets higher today, but I'm not sure I totally understand it. can anyone explain in laymans's words what is the FED trying to accomplish and why? http://biz.yahoo.com/ap/080311/fed_credit_crisis.html AP Fed Easing Liquidity in Funding Markets Tuesday March 11, 11:21 am ET By Jeannine Aversa, AP Economics Writer Fed Announces Further Steps to Ease Credit Crunch WASHINGTON (AP) -- The Federal Reserve on Tuesday ramped up efforts to provide more relief to squeezed financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the U.S. economy into its first recession since 2001. The Fed said it will make up to $200 billion in Treasury securities available to big Wall Street investment houses and banks. The new action is designed to ensure that there is an ample supply of Treasury securities. With strains in financial markets, demand has grown for Treasury securities, considered the safest investment in the world because they are backed by the U.S. government. On Wall Street, the Fed's action propelled stocks upward. The Dow Jones industrials jumped more than 220 points in morning trading. The move comes as banks and other financial institutions face cash crunches.