Touting the Success of Jawboning, Fed Steps Away from Corporate Bond Market, Having Bought Almost No Bonds & Bond ETFs

by Wolf Richter
Wolf Street

Fed’s ETF holdings fell for second month, corporate bond holdings barely ticked up: This “$750 billion” SPV is over before it really got started. But the hype had been huge.

The Fed’s super-hyped, glorified, deified, and ballyhooed $750-billion buying-program of corporate bonds and bond ETFs, including junk bonds and junk-bond ETFs, had triggered one of the most magnificent credit-market rallies ever. And then the Fed hardly bought anything. Now the Fed is touting its success in jawboning the markets into a frenzy without having to do hardly any actual purchases. And it put a number on it – what percentage of the bond market rally was caused by jawboning, and what percentage was caused by actual bond purchases. And now, the Fed appears to be winding down the program altogether.

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