The Fed starts today to buy corporate debt.
The New York Fed announced yesterday evening that a new landing facility would start to purchase ETFs in corporate debt today. The Secondary Market Corporate Credit Facility was revealed in March, and since then, it kept the markets calm.
As part of the stimulus package approved in March, the Congress allocated $454 billion worth of equities to backstop the Fed loans.
Only the eligible ETFs will be considered, and they have to have exposure to US investment-grade corporate bonds. Also, the Fed will look out for the style of management and the amount of debt.
Moreover, the Fed set the target inflation rate at 2%. According to analysts from Morgan Stanley, the inflation might expand starting 2022. Compared to other central banks, the US is likely to stick to the plan.
In the short-term, experts see the inflation at low levels, as the pandemic and the economic shutdown will make overall costs to drop. The numbers can be confronted when the CPI report will be released later on today.
The April report allegedly will read a 0.3% year-over-year increase – the smallest since September 2015, say market analysts. New records were set – the national debt passed last week $25 trillion for the first time, and it will keep on increasing.
The benchmarks barely increased today in early trading – approximately 0.2% each.
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Sources: cnbc.com, marketwatch.com, investing.com
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