Reuters ahead with key news on Fed's response to coronavirus; market reacts
A liquidity crunch in the market for short-term borrowing eased after Reuters was ahead in reporting that the U.S. Federal Reserve would reinstate a funding facility it last used during the 2008 financial crisis to get credit directly to businesses and households – an effort to try to counter the adverse economic impact of the coronavirus outbreak and the resulting turmoil in global markets. The euro/dollar 3-month FX swap spreads narrowed to 55 basis points on the news, which was later confirmed by the Fed. This followed a Reuters exclusive on Friday reporting that the Fed was urging banks to use their emergency liquidity buffers to support companies, with the promise that the central bank would go easy on them if they fell below a key cash threshold. The Fed confirmed the news on Sunday.