The big market moving news today is the Fed’s announcement of a new Term Securities Lending Facility (TSLF) (Bernanke just loves these acronyms doesn’t he?) in which the Fed will lend treasuries and accept agency and non agency AAA/Aaa private label mortgage backed securities as collateral. It will lend up to $200 billion in treasuries for a 28 day period and the lending rate will be determined by auction (FOMC Announcement).
This directly addresses the current crisis in the mortgage backed securities market, allowing holders of these securities to exchange them for treasuries in order to bolster their balance sheets for a 28 day period and hopefully ride out the current crisis.
The entire market is up on the announcement (Dow: +160, S&P:+16, Nasdaq: +30).