The Federal Open Market Committee meeting that began Wednesday, and concludes with a statement and a press conference from Federal Reserve Board Chair Jerome Powell, will be unique because rates remain at the zero lower bound and the Fed has taken many actions to ensure smooth markets since the economic shutdown to contain the coronavirus.
…Tom Garretson, senior portfolio strategist fixed-income strategies for RBC Wealth Management’s Portfolio Advisory Group … expects the Fed to announce “a more-flexible monthly purchase program [for Treasuries] north of $100 billion. While we expect the composition of Treasury purchases to eventually shift toward longer-duration as part of a concerted effort to provide stimulus via lower yields similar to the QE2 program — as opposed to recent purchases across the curve in the name of market liquidity — the Fed may wait until the June meeting when they will have more economic data, and an update to their economic projections and interest rate forecasts. A monthly program will give them more flexibility to go where any market stresses might necessitate them to.”
(Read more: The Latest)

The Federal Reserve expanded the scope and duration of the Municipal Liquidity Facility, a $500 billion emergency lending program aimed at providing short-term credit to state and local governments as they endure the economic fallout from the coronavirus pandemic.
The U.S. central bank lowered the population thresholds under which counties and cities would be eligible to sell short-term debt to the facility. The new levels are at least 500,000 for counties and 250,000 for cities, down from 2 million and 1 million.
“The new population thresholds allow substantially more entities to borrow directly from the MLF than the initial plan announced on April 9,” the Fed said in a statement Monday.
(Read more: The Bond Buyer)