FOMC, Dow Jones Index, US Economy, COVID – Talking Points
- FOMC[1] announcement keeps rates unchanged at 0-0.25%, as expected
- The Dow Jones[2] Index remains higher following the policy statement
- Fed Chair Powell says "we're in this until we are well through it"
As expected, the Federal Reserve’s Federal Open Market Committee kept rates unchanged Wednesday afternoon at 0-0.25%. The Dow Jones Index was unaffected as the announcement crossed the wires, with the index continuing in positive territory following some brief whiplash, currently higher by 0.29%. With no major policy shifts announced this afternoon, the accommodative stance is still the status quo, as expected.
Dow Jones Index (1-Min Chart)
Source: IG Charts
With the Fed already in an aggressive stance following its actions surrounding the COVID-19 pandemic and today’s reinforcement of that stance, upward pressure may continue in the short-term for US equity markets. Indeed, a major boost to markets remains the Fed’s quantitative easing actions through its balance sheet, now hovering just under 7 trillion in total. Regarding the ongoing COVID-19 pandemic, the Fed stated "The path of the economy will depend significantly on the course of the virus."
S&P 500 Versus Fed Balance Sheet
Chart created in TradingView[3] by Thomas Westwater
Adding to the Fed’s “whatever it takes” stance to support the economy was an announcement extending the lending facilities put in place earlier this year, designed to support the flow of credit throughout the economy. In an implementation note, US Dollar[4] swap lines are also being extended. The US Dollar went back and forth during Powell's press conference, setting fresh intraday lows of 93.22, before spiking higher, and finally back to the 93.34 level, mostly unchanged from before the FOMC statement. In
