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

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 12:30 a.m. ET: 32,994,213 — Total deaths: 996,682 — Total recoveries: 22,850,358Map.
  2. U.S.: Total confirmed cases as of 12:30 a.m. ET: 7,114,235 — Total deaths: 204,752 — Total recoveries: 2,766,280 — Total tests: 101,298,794Map.
  3. States: 3 states set single-day coronavirus case records last week — New York daily cases top 1,000 for first time since June.
  4. Health: The long-term pain of the mental health pandemicFewer than 10% of Americans have coronavirus antibodies.
  5. Business: Millions start new businesses in time of coronavirus.
  6. Education: Summer college enrollment offers a glimpse of COVID-19's effect.

Democrats demand Trump release his tax returns after NYT report

Compilation images of House Nancy Pelosi and President Trump. Photo: Joshua Roberts/Getty Images/Chip Somodevilla/Getty Images

Democrats called on President Trump to disclose his tax returns following a New York Times report alleging he paid $750 in federal income taxes in 2016 and 2017 and nothing in 10 of the past 15 years.

Details: Trump said the report was "total fake news," that he's unable to release the returns as they're "under audit" by the IRS, "which does not treat me well." House Speaker Nancy Pelosi (D-Calif.) said in a statement the report "provides further evidence of the clear need" for a House lawsuit to access the tax returns and "ensure the presidential audit program is functioning effectively, without improper influence."

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Former Trump campaign manager Brad Parscale hospitalized

Brad Parscale, the former campaign manager for President Trump's re-election campaign, at Drake University in January in Des Moines, Iowa. Photo: Tom Brenner/Getty Images

Fort Lauderdale police arrived at former Trump campaign manager Brad Parscale's home on Sunday after his wife called and said he was threatening to harm himself, Florida officials confirmed to Axios.

Details: Fort Lauderdale Police Sgt. DeAnna Greenlaw told Axios officers responded to a report of "an armed male attempting suicide" just before 4 p.m. local time.

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