Dramatic Fed action should provide investors with some sense of stability in an otherwise extremely volatile world, economists at JP Morgan Asset Management apprise.
“Stability in the financial system should provide a confidence boost to investors otherwise worried about potential liquidity crises, particularly as they relate to redemptions of investments.”
“Support for small and medium-sized businesses should help to shore up economic health, and potentially prevent the spread of wider-reaching damages related to rising unemployment and falling income.”
“Increased Fed activity should put downward pressure on yields across the curve, supporting a duration trade and positioning bonds as an ‘insurance’ asset.”
“Low interest rates in the U.S. and around the world should encourage risk taking, as the opportunities for yield in fixed income dry up.”