Sunday night, the Federal Reserve surprised the market with another emergency rate cut which slashed the federal funds rate to between 0 and 0.25%. The move was especially surprising since it is scheduled to meet this week, but it highlights the urgency of the situation. The last time the Fed funds rate was this low was in 2015 prior to it beginning to hike rates following seven years of zero percent rates.

In addition to lowering rates, the Fed also restarted quantitative easing as it pledged to buy at least $700 billion in Treasuries and mortgage-backed securities to put further downward pressure on interest rates. The Fed doesn't yet anticipate a recession but sees the cuts as insurance to cushion the economic blow that will come from stopping the economy to fight the virus.

Commercial Paper Facility

The Fed made another surprise move on Tuesday by announcing that it was bringing back another 2008-era program to establish a commercial paper funding facility. Basically, all types of corporations rely on the commercial paper market for short-term funding. Disruptions in the commercial paper can have all types of ripple effects for other businesses and workers upstream and downstream. Basically, the Fed will temporarily step in as the buyer of last resort for commercial paper and ensure that it keeps functioning.

Focus on Fiscal Policy

Sunday night futures showed that stock markets were down 7%. Following, the Fed's move, markets made up these losses and were slightly higher by 1%. However, this strength was met with even more selling, and stocks finished Monday down more than 10%. Stocks were also falling Tuesday morning with the S&P 500 (SPY  ) undercutting Monday's lows before rallying on Secretary Mnuchin's comments of an even bigger fiscal package than the $850 billion being discussed earlier.

While a common refrain is to say that "the Fed is out of bullets," when rates hit zero. It's clearly not the case as the Fed can do so many creative things with its tools as 2008 demonstrated. However, the Fed has certainly been deploying some bullets, while Congress has been ineffectual. The Fed's moves have put even more pressure on Congress to act as has the obvious economic and financial stress.