Today, March 23, the Federal Reserve announced that it would backstop all credit markets in the United States without limits.

The Fed said it would purchase Treasuries and mortgage-backed securities “in the amounts needed to support smooth market functioning.” In other words no limits to how much the Fed will buy. That’s a bigger commitment than the Fed made in the 2008-2009 global financial crisis.

The Fed also announced today it will buy certain corporate bonds for the first time in its history and said it will “soon” announce a Main Street Business Lending Program. These programs are meant to provide ample availability of loans to small and large businesses on top of any moves by Congress. “The corporate bond market almost broke on Thursday and Friday,” Aaron Brachman, a managing director at Washington Wealth Group, told the Washington Post.

The signs of stress are, seemingly, everywhere. Rhode Island’s state treasurer warned the state is likely to run out of money in weeks. Airlines and hotels are asking for massive billion-dollar loans. And layoffs continue to climb. And so do the forecasts of peak unemployment. Last week, I found Treasury Secretary Steve Mnuchin’s projection that the unemployment rate could hit 20% shocking. This week it’s worse: James Bullard, president of the St. Louis Fed, said that unemployment could reach 30% in the second quarter. That’s Great Depression levels.
This week alone, the Fed plans to purchase $375 billion worth of Treasury securities and $250 billon worth of mortgage-backed securities.

The Fed is also relaunching programs to support corporate and household debt, such as the Term Asset-Backed Securities Loan Facility, which helps the market for student loans, auto loans, credit card loans, and loans backed by the Small Business Administration.

The Fed also said Monday that it will support the commercial lending market by purchasing commercial mortgage-backed securities in addition to mortgage-backed securities made up of home loans.
The Standard & Poor’s 500, which was down 4.86% at 11:45 a.m. New York time, was down 1.57% at 12:52 p.m. The index closed off 2.93%