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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Jerome Powell. Photo: Mark Makela/Getty Images

Investors and President Trump want the same thing after Tuesday's surprise 50 basis point cut by the Fed: more cuts.

The state of play: The announcement, two weeks to the day before the beginning of the central bank's scheduled March 17–18 policy meeting, has investors scratching their heads. "The Fed pulled the fire alarm without telling anybody why," Bernard Baumohl, chief global economist at the Economic Outlook Group, tells Axios.

  • "There is something else going on here that triggered this cut and everybody is struggling to understand what the Fed saw," he added.
  • The Fed's rate cut announcement at 10 a.m. and chair Jerome Powell's 11 a.m. press conference seemed choreographed to soothe the market but instead created more uncertainty.
  • In response to yesterday's announcement, the president tweeted and Fed fund futures contracts began pricing in what would be crisis-level spending from the Fed.

Between the lines: Baumohl posits that it could be what the Fed's contacts at various U.S. businesses have reported about the impact of the coronavirus on demand, or an advanced copy of Friday's jobs report that shows a particularly weak number.

The intrigue: Fed fund futures prices show traders now see an additional rate cut at March's meeting and another priced in for April, with that month's contract suggesting the Fed could cut rates by an additional 50 basis points, Ben Jeffery, interest rate strategist at BMO Capital Markets, tells Axios.

"It’s remarkable," Jeffery says. "The surprise rate cut cemented the idea that [the coronavirus outbreak] will be a substantial issue for the economy going forward."

  • Deutsche Bank chief U.S. economist Matthew Luzzetti sees the Fed cutting another 50 basis points at its meeting in two weeks, "a move that would be consistent with the historical experience of inter-meeting actions."

The big picture: Lower rates and more central bank stimulus are now expected around the globe, Mark Haefele, global CIO of UBS Global Wealth Management, said in a note.

  • "We also believe the Fed's rate cut is likely to pressure other leading central banks, including the Bank of England, the European Central Bank, and the Swiss National Bank to act."
  • "Meanwhile, we expect China's fiscal support to exceed 2% of GDP this year, after already having announced corporate tax cuts and emergency spending worth 1.2% of GDP."

Quick take: Investors and economists have said for days that monetary policy is unable to combat the underlying problem and central banks now risk wasting what little ammunition they have.

Go deeper ... Federal Reserve: Coronavirus poses "evolving risk" to the economy

Go deeper

Parkland shooting victims' families settle suit with school district

A makeshift memorial outside Marjory Stoneman Douglas High School in Parkland, Florida, on Feb. 14, 2020. Photo: Matias J. Ocner/Miami Herald/Tribune News Service via Getty Images

Families and survivors of a 2018 mass shooting at a high school in Parkland, Fla., reached a $25 million settlement in their lawsuit against the Broward County school district Monday, per the South Florida SunSentinel.

Why it matters: The deal was reached in the suit over the massacre at Marjory Stoneman Douglas High after the school district won a Florida Supreme Court ruling that could have capped damages at $300,000 in total without approval from the state legislature, AP notes.

Texas Republicans pass new congressional maps in their favor

Photo: Matthew Busch/Bloomberg via Getty Images

The Texas House voted 84-59 late Monday to approve new congressional district maps that reduce the number of districts with Black and Hispanic majorities, per the Texas Tribune.

Why it matters: The legislation comes after recent census figures found Texas' growing diverse population doesn't bode well for Republicans, who then worked to protect incumbents with the redrawn maps.

4 hours ago - World

North Korea's military fires another ballistic missile into sea

A woman in Seoul, South Korea, walks past a television image if North Korean leader Kim Jong-un. Photo: Jung Yeon-je/AFP via Getty Images

North Korea's military fired at least one ballistic missile into the sea off its east coast on Tuesday, per multiple reports.

Why it matters: Pyongyang's latest in a series of recent missile launches happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

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