Capital markets are supposed to be efficient, but they sure don't act like it sometimes.
Monday was a case in point.
To paraphrase The Brain from the film "Brick" (an absurdly underrated neo-noir masterpiece), I bet if you got every trader in town together and said 'Show your hands' if any of them didn't know the Fed would soon announce details around purchases of individual corporate bonds, you'd get a crowd of full pockets.
In other words: It's not exactly a secret that the Fed is poised to buy corporate bonds in addition to the credit ETF purchases which started last month. In fact, the only reason some investors are even in corporate credit in the first place is to frontrun the Fed. Here's how BofA put it a month ago:
Note to Fed: A lot of investors (including non-credit ones) have bought IG corporate bonds the past two months on the expectation they can sell to you. So it would be helpful if you soon began buying in size.
Given that, you wouldn't think the formal announcement of corporate bond buying on top of ETFs would cause much of a stir, but it did. In fact, it pulled equities out of the red on Monday afternoon, and pushed the dollar lower.
You can, if you're so inc
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