Question

2020 Discuss the effect the FOMC's actions (or lack of actions) had on the following: a. The stock market as measured by the Dow Jones Industrial Average (DJIA), on Friday before the announcement and the close on Monday. b.. Interest rates (use the 3-month and 10- year U.S. Treasury securities yields and explain if rates went up on down and by how many basis points based on the change from the Friday before the press release to the day after the press release (Monday) (a good source for this question is the Daily treasury Yield Curve Rates from the U. S. Department of the Treasury).

Answer 1

Solution and Explanation:

The FOMC’s actions are as follows:

1.a. The dow jones Fell by around 13% from the 23185 to the 20815 even if fed cut the rates by 100 basis points. This fall was due to the economy heading into an impending recession.

1.b. The 10 year treasury yield fell from .94% on the friday to .73% on the monday .

The 3 months treasury yield fell from .287% on the friday to .124% on the Monday.