Behold! The Fed’s First $305 Million In ETF Purchases
The Fed bought $305 million worth of corporate credit ETFs this week, the latest update on the balance sheet appears to show.
The Secondary Market Corporate Credit Facility was activated on Tuesday, after a solid month of speculation from market participants who were keen to front-run Powell in high-grade and high-yield products seen as likely targets for Fed buying.
On Monday, the New York Fed said purchases would begin the following day, and flows observed in LQD - the most popular investmen
Samuarai Jay!
Watching the Dow toss aside that down move at mid day made me suspicious …A lot of other activity by other actors is catalyzed at the hint of Fed dabbling in Equities…. That can be mysterious to me but I am certain others have a clear picture of Bank and Hedge fund reaction especially in an ops expiration week ahead….
We dabble unabashedly in speculating into traders’ who speculate that the Fed is only one step away from buying equities. Or, that the Fed’s backstop on corp debt is an indirect boost to corp profitability. Meanwhile, corps are cranking out tons of paper and investors in that debt have a printing press to remove(?) risk.
slowly pushing away from the table (wait…don’t forget the drink) …is how I feel right now…
mosey on down the road and read up on YCC I suppose
Why does the Fed have to buy the ETFs (incurring principal risk) rather than just accept them as collateral (with a haircut) in a repo transaction?