solarbird | FedDay.

Good evening.

Whelp, the US has a Zero Interest Rate Policy, or ZIRP. We've already been effectively there for over a week, with actual overnights in the .15% range, so this isn't a big number difference, but still, having it official is kind of scary. Here, have some spicy meatballs:

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

Translation: DEFLATION O SHI
As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities

Translation: We'll print and print and print and print and print 'till the dollar goes down.
Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.

Translation: Welcome to Bank of Fedmarica Financing, the Lender of Only Resort.
Cramer said this today on CNBC: The Fed announcement today shows that it is doing everything it can possibly do -- lowering rates from 1% to between 0% and 0.25%, continuing to buy large amounts of agency debt and mortgage backed securities and evaluating whether to buy long-term securities. This is an amazing announcement, and the market should be higher than the 300- point gain in the Dow we're seeing. Bernanke is clearly doing whatever he can to fix this economy and the markets, and eventually it is going to work.

Because apparently if you fall far enough down the cliff you end up back on top! ATTENTION, CRAMER: THIS IS NOT DRIVING TO AWESOME THROUGH STUPID. THIS IS DRIVING TO STUPID THROUGH STUPID. Jesus.
Peter, one of the Minyans at Minyanville: Lest there was any doubt, the Fed just made it absolutely clear that they will trade a weaker dollar in exchange for zero out the Treasury curve as far as the eye can see. A word to the wise, don't get in the way. The Fed has the world's largest SIV and they are not afraid to use it.

Translation: Duck!

The US dollar index dropped below 80 before bouncing just back above, a nice 2.3% move in TWENTY MINUTES. The Yen is up sharply, trading around 88.9 to the US dollar, having moved a similar 2.3% today. The Swiss Franc spiked 3.51% with a lot of Europe closed for the day; numbers against the rest of the basket severe also severe but will be even more interesting once Europe wakes up tomorrow morning. Tonight, though, the JCB says it's not going to intervene; hey, they've had their Round One and are heading in for Round Two, so why bother? Paul Krugman notes we've gone the way of Japan now. Having lost most of one decade in the first part of this downtown, well, this would mark the start of a second.

In side-effects news, many money market funds now have negative yields. Yay.