Thread by @Amdalleq

On Monday, I published an article titled Global Central Banks' Capitulation (Coordination) summarizing developments of the central banks all over the world during this month...

Since then we've seen even more action which I sum up in this THREAD!! /1
sebmarketwrap.blogspot.com/2020/03/global…

At the beginning let's remind us that it has all started on March 3 when the Reserve Bank of Australia has cut rates by 0.25% to 0.50% level. Subsequently, the Federal Reserve has cut rates by 0.50% after the first emergency meeting since October 2008 or the last fin. crisis /2

On the next day, the Bank of Canada followed cutting rates by 0.50% to 1.25%. Meanwhile, signs about the coronavirus becoming a global pandemic were growing with a rapidly increasing number of cases in Europe. Markets were just setting up for the quickest fall in history.. /3

On Monday, March 9, half of Italy has been locked down and we repeated ourselves what kind of trading limits have the S&P 500 has. The market free-fall was exaggerated by the collapse of the negotiations between Saudi Arabia and Russia about the oil production cuts. /4

Also on that day, I released another article called We are in the middle of a global crisis.

I was wondering whether the Fed will cut rates to zero (by 1.00%) and introduces full-blown QE (Quantitative Easing). There was still 9 days to the Fed meeting /5
sebmarketwrap.blogspot.com/2020/03/we-are…

I also mentioned the European Central Bank say that:

"They may also increase the number of asset purchases, especially corporate bonds as companies in Europe may face real difficulties amid the European economy falling into a recession." /6
sebmarketwrap.blogspot.com/2020/03/we-are…

And then the major party has started. Bank of England on March 10 announced an emergency 0.50% cut to 0.25% level together with small and medium companies funding scheme which could provide more than $123 billion support. /7

cnbc.com/2020/03/11/ban…

Subsequently, on Thursday (Mar 12), the European Central Bank announced the expansion of the QE program in the amount of $135bn asset purchases this year. The Fed introduced a cumulative $5.4tn in repo operations on the same day. Result? S&P 500 has fallen into a Bear Market. /8

On Friday, Bank of Canada and the Norges Bank (Norway) have both cut rates by 0.50%, Bank of Japan bought 101.4 billion yen ($940m) of exchange-traded funds and Australian Central Bank injected to the financial system A$8.8bn ($5.5bn) - the most amount in at least 7 years. /9

On Sunday night (March 15), just a couple of days before the meeting the Fed went all-in announcing a 1.00% rate cut and $700bn of QE. In addition, they introduced swap lines to provide dollars to foreign central banks as the banks' funding has been squeezing... /10

On Monday, March 16, the Bank of Japan (BoJ) announced up to double purchases of Exchanged Traded Funds (ETFs) (annual upper limit increase to $113bn this year from $56.5bn) and raised the limit of corporate bond purchases from $28bn to $39.5bn annually. Look at white line. /11

On the same day, Royal Bank of New Zealand and Bank of Korea announced rate cuts by 0.75% (to 0.25%) and by 0.50% (to 0.75%) respectively whereas Royal Bank of Australia said that they are ready to announce QE on Thursday. /12

business.financialpost.com/pmn/business-p…

On Tuesday, the Fed continued and said that it reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households, the so-called Commercial Paper Funding Facility (CPFF). 13/

reuters.com/article/us-hea…

And then on Wednesday night, the ECB bazooka came...
The European Central Bank announced €750bn ($820bn) Pandemic Emergency Purchase Programme (PEPP)

“Extraordinary times require extraordinary action. There are no limits to our commitment to the euro” President Lagarde said 14/

Also, on Wednesday, the Fed established a Money Market Mutual Fund Liquidity Facility (MMLF) in order to provide money market funds with loans so they can get meet outflows

Yes, highly liquid funds(invest in assets with <13 mths maturity) need support /15
finance.yahoo.com/news/u-fed-mov…

The Reserve Bank of Australia again cut rates to an all-time low of 0.25% and said that
it set a target for the yield on 3-year Australian government bonds of 0.25% (to achieve by bond purchases...

So we have QE in Australia for the first time ever /16
finance.yahoo.com/news/australia…

In the latest news

Fed Establishes Dollar Swap Lines With More Central Banks:
Australia, Brazil, Denmark, New Zealand, Mexico, South Korea, Singapore, Sweden, and Norway

However, the People's Bank of China is in the most need of USD for which the Fed cannot provide(graph) /17

Also today (March 19) the Bank of England at a special meeting cut rates to 0.1% (by 0.15%) and decided to increase its holdings of UK government and corporate bonds by £200 billion. /18

bankofengland.co.uk/monetary-polic…

Coming to the end of the Thread... the Fed has just announced that it increases its daily bond purchases from $40bn to $75bn a day.

However, it does not change initial plans of buying $700bn of assets during the new QE program. 19/
newyorkfed.org/markets/domest…

Market reaction? See the chart made in the morning

Now, however, after all these interventions stocks have jumped off the lows. Watch carefully whether it will last longer than a day.

Also, look at the bonds spreads and funding costs such as FRA/OIS showed in the thread.
/20

If all those interventions fail then as I wrote in my latest:

"..we came to the point where more central bankers' interventions intended to prevent, actually accelerate the plunge, increase the panic and massive distortions in the financial markets" /END
sebmarketwrap.blogspot.com/2020/03/global…

@threadreaderapp unroll, please

Summary of the Central Banks' interventions since the beginning of March

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