Discount rate also cut by 1.5% to 0.25%. QE at 700bn$. Repo at 500bn$ treasuries and 200bn$ MBS ($30bn free O/N repo for ever primary dealer). Dollar swap lines introduced, reserve requirements out.
All those Eurodollar trades finally made sense.
The cut came just a few hours before globex opened on Monday. Also, there were only a couple of days to the scheduled FOMC meet. So the Fed clearly thought that the situation was so bad that they couldn't wait a few days. Even during 2008, we never saw two unscheduled emergency cuts one after the other.
The first reaction in the fixed income space was blehh. Liquidity was bad as ever in treasuries (Ultra bond futures traded in low double digits and the 30yr traded some 1000 contracts only!!). However, there was some improvement later in the day (as compared to previous days).
Interestingly, everyone was expecting stocks to go limit up. What we got instead was a limit down in S&P within 30 minutes!
It was funny seeing the reaction of people when the market challenged their basic assumptions.
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