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Illustration: Aïda Amer/Axios

The New York Fed added $83.1 billion in temporary liquidity to financial markets Thursday, and the U.S. central bank looks primed to keep pumping cash for at least the next few months.

Why it matters: The stock market's 30% gain in 2019 was in no small part backed by the Fed's decision to cut U.S. interest rates three times and inject more than $1 trillion of temporary financing into the repo market. It also added more than $400 billion to its balance sheet in the fourth quarter.

What we're hearing: Fed vice chair Richard Clarida told an audience assembled at the Council on Foreign Relations Thursday that the Fed was prepared to continue adding to its balance sheet and providing liquidity to the repo market "at least through April."

  • Clarida told me after the event he was not concerned markets could be taking advantage of the so-called "Powell put" — the belief that the Fed and chair Jerome Powell are using the cash to stimulate the economy or that they will cut rates to juice the stock market if prices fall significantly.
  • "We realize that sometimes we’ll be criticized for it, but it’s not a factor driving our decisions," he said. "We have a very clear mandate, and are focused on what we need to do."

What they're saying: Clarida's speech was "music to the ears of traders and investors who have profitably ridden a liquidity-driven rally that has allowed them to quickly overcome a set of shocks, including the latest one, the sudden escalation of the U.S.-Iran conflict," Mohamed A. El-Erian, chief economic adviser at Allianz SE, wrote in an opinion piece for Bloomberg.

What's next: While Clarida pointed to April because of Tax Day, analysts who watch the market closely expect the Fed to keep delivering cash for even longer.

  • Priya Misra, head of global rates strategy at TD Securities, a primary dealer that does business directly with the Fed, told Axios she expects the central bank to add $100 billion–$200 billion more in reserves and continue its Treasury bill buying through July to about $500 billion.
  • In a note to clients, she added that she expects the Fed's balance sheet to move above $4.4 trillion this year, near its all-time high.

Go deeper: The market will need the Fed again in 2020

Go deeper

59 mins ago - Politics & Policy

Stalemate over filibuster freezes Congress

Illustration: Sarah Grillo/Axios

Senate Majority Leader Chuck Schumer and Mitch McConnell's inability to quickly strike a deal on a power-sharing agreement in the new 50-50 Congress is slowing down everything from the confirmation of President Biden's nominees to Donald Trump's impeachment trial.

Why it matters: Whatever final stance Schumer takes on the stalemate, which largely comes down to Democrats wanting to use the legislative filibuster as leverage over Republicans, will be a signal of the level of hardball we should expect Democrats to play with Republicans in the new Senate.

Dave Lawler, author of World
1 hour ago - World

Biden opts for five-year extension of New START nuclear treaty with Russia

Putin at a military parade. Photo: Valya Egorshin/NurPhoto via Getty

President Biden will seek a five-year extension of the New START nuclear arms control pact with Russia before it expires on Feb. 5, senior officials told the Washington Post.

Why it matters: The 2010 treaty is the last remaining constraint on the arsenals of the world's two nuclear superpowers, limiting the number of deployed nuclear warheads and the bombers, missiles and submarines which can deliver them.

Updated 2 hours ago - Technology

Facebook refers Trump ban to independent Oversight Board for review

Photo: Alex Edelman/AFP via Getty Images

Facebook's independent Oversight Board has accepted a referral from the platform to review its decision to indefinitely suspend former President Trump.

Why it matters: While Trump critics largely praised the company's decision to remove the then-president's account for potential incitement of violence, many world leaders and free speech advocates pushed back on the decision, arguing it sets a dangerous precedent for free speech moving forward.