Fed rolls out $2.3 trillion to backstop "Main Street," local governments during crisis

davfor

In announcing what may prove its most groundbreaking step in the crisis fight, Fed chair Jerome Powell said the Fed’s role had now broadened beyond its usual focus in keeping markets “liquid” and functioning, to helping the United States get the economic and financial space it needs to fix a dire health emergency.

https://reuters.com/article/us-health-coronavirus-fed-mainstreet/fed-rolls-out-2-3-trillion-to-backstop-main-street-local-governments-during-crisis-idUSKCN21R1WY

The Federal Reserve said it would buy some junk bonds in a package of announcements that could pump $2.3 trillion into the economy

https://nytimes.com/2020/04/09/business/economy/fed-to-buy-municipal-some-riskier-debt-as-part-of-expansive-programs.html

WABAC

How the heck do you put an accurate price on anything if the Fed is just going to step in and buy everything?

Sounds to me like too much money chasing to few (known good) goods.

catch22

Watching Bloomberg this morning when the details of this program was discussed.

DAMN !!!

And yes, you did see, too; the kitchen sink passing through the support door.

Charles

Wow.

Charles

Here was another headline this morning: IMF Sees World Economy in Worst Recession Since Great Depression

Charles

At this rate, the 11 year bull never stopped.

Charles

We'll see come May Day.

davfor

Here's a little more detail about the high yield investments. It sounds like they may not be directly picking individual winners and losers for now:

the Fed indicated that it would begin to dip its toes into the high yield bond market with SMCCF purchases of exchange-traded funds (ETFs) that have exposure to high yield corporate bonds.

https://fxstreet.com/analysis/the-fed-goes-nuclear-part-ii-202004091700

MikeM

Well, HYD up 5+% so far today.

rono

Howdy folks,

Every central bank is printing money like drunken sailors and our is printing the most. I can't see how this will end well. Never has in the history of the world. Oh, yeah, it's different this time.

gold, guns, beans and bunker,

and so it goes,

peace, and flatten the curve

rono

Shostakovich

I still say: they should have instituted a 4 or 5-month rental / mortgage holiday.

davfor

Here is a little more detail on the types of high yield bonds and about other financial products the Fed will now be buying:

In a move that surprised some investors, the central bank will also expand its bond-buying program to include debt that was investment-grade rated as of March 22 but was later downgraded to no lower than BB-, or three levels into high yield. It’ll also buy exchange-traded funds, the preponderance of which will track investment-grade debt along with some that track speculative-grade debt. Together, the programs will support as much as $850 billion in credit.

.....as well as fund the purchases of some types of......collateralized loan obligations and commercial mortgage-backed securities.

https://washingtonpost.com/business/on-small-business/fed-to-buy-junk-bonds-and-lend-to-states-in-fresh-virus-support/2020/04/09/1baf9420-7a60-11ea-a311-adb1344719a9_story.html

Mark

“I thought they would do it if things turned down again. They keep doing things day after day, it makes you wonder how bad the data is they’re seeing,” said John Briggs, head of strategy at NatWest.