A little more than a week ago, the 10-yr note yield had climbed to 1.25% from a recent depth of 0.32% for a variety of reasons, one of which was attributed to illiquid conditions.

To say the least, the Federal Reserve has opened the valve on the fire hose to release all kinds of liquidity to keep financial markets and credit flowing. It's a stretch to say credit is flowing right now beyond the draws companies are making on existing credit lines, but liquidity is coming back to the Treasury market and agency MBS market.

The Federal Reserve took the $700 billion cap off its latest asset purchase program and said it will now buy "in the amounts needed" to support the smooth functioning of markets for Treasury securities and agency MBS. Its plans this week alone included buying $125 billion of Treasury ($75 billion) and agency MBS ($50 billion) every day. That's $625 billion -- in a week! The total for QE2 during the depth of the financial crisis was just over $500 billion in a span of seven months.

Anybody who says this time isn't different is stuck in a different time.

This time is different in a way no one ever envisioned, as the coronavirus pandemic has shut down major economies, including the U.S., which is the largest of them all.

The Senate passed a $2 trillion fiscal stimulus package and political leaders hastened to add that they are willing to do more if necessary. That aid package will be financed with Treasury issuance, yet bond prices didn't blow out this week at that thought nor did they blow out at the sight of the S&P 500 soaring as much as 20.3% from its intraday low on March 23.

The 10-yr note yield moved up a pedestrian 10 basis points from March 23, but at 0.85%, it is still 40 basis points less than where it stood a little more than a week ago.

We can go back to speculating why that is, invoking ideas like a "safety trade," yet we suspect it's more a case of the Fed's actions to suppress long-term rates with its heavy-handed purchases and the market's faith that the Fed is going to keep doing whatever it takes to keep things running smoothly at this rough time.