{"id":51918,"date":"2020-03-23T11:50:46","date_gmt":"2020-03-23T16:50:46","guid":{"rendered":"https:\/\/olduvai.ca\/?p=51918"},"modified":"2020-03-23T11:50:51","modified_gmt":"2020-03-23T16:50:51","slug":"in-unprecedented-move-fed-unveils-open-ended-qe-including-corporate-bonds","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=51918","title":{"rendered":"In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.zerohedge.com\/economics\/fed-unleashes-unlimited-qe-will-buy-corporates-munis-cmbs\">In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds<\/a><\/h3>\n\n\n\n<p>Coming into Monday, the Fed had a problem:&nbsp;<strong>it had already used up half of its entire emergency $700BN QE5 announced last weekend.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/qe%20half%20down.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p>Which, together with the plunge in stocks, is why at 8am on Monday, just as we expected &#8211;&nbsp;<a href=\"https:\/\/www.zerohedge.com\/political\/after-bernanke-yellen-demand-monetize-everything-congress-considers-allowing-fed-buy\">given the political cover they have been provided<\/a>&#8211; The Fed unveiled an unprecedented expansion to its mandate,&nbsp;<strong>announcing open-ended QE which also gave it the mandate to buy corporates bonds (in the primary and secondary market) to unclog the frozen corporate bond market as we just one step away from a full Fed nationalization of the market (only Fed stock purchases remain now).<\/strong><\/p>\n\n\n\n<p>As\u00a0<a href=\"https:\/\/www.zerohedge.com\/markets\/buyback-backlash-begins-fed-will-limit-buybacks-dividends-companies-using-its-credit\">noted elsewhere<\/a>, the Fed\u2019s new credit facilities carry limits on paying dividends and making stock buybacks for firms that defer interest payments, but\u00a0<strong>have no explicit restrictions preventing beneficiaries from laying off workers.<\/strong><\/p>\n\n\n\n<p>Additionally, in addition to Treasuries, The Fed will<strong>&nbsp;buy Agency Commercial MBS all in unlimited size.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/ESW4_6PUcAA5HQG.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p>The Fed will buy Treasuries and agency mortgage-backed securities \u201cin the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy,\u201d and will also buy agency commercial mortgage-backed securities, according to a statement.<\/p>\n\n\n\n<p>The Fed also said it will support \u201cthe flow of credit to employers, consumers and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing.\u201d It will be backed by $30 billion from the Treasury\u2019s Exchange Stabilization Fund.<\/p>\n\n\n\n<p>Coincidentally, this unprecedented action takes place just\u00a0<strong>hours after real estate billionaire Tom Barrack (and friend of Trump) said the U.S. commercial-mortgage market is on the brink of collapse and predicted a \u201cdomino effect\u201d of catastrophic economic consequences<\/strong>\u00a0if banks and government don\u2019t take prompt action to keep borrowers from defaulting.<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In Unprecedented Move, Fed Unveils Open-Ended QE Including Corporate Bonds Coming into Monday, the Fed had a problem:&nbsp;it had already used up half of its entire emergency $700BN QE5 announced last weekend. Which, together with the plunge in stocks, is why at 8am on Monday, just as we expected &#8211;&nbsp;given the political cover they have [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3954,303,661,662,827,3650],"class_list":["post-51918","post","type-post","status-publish","format-standard","hentry","category-economics","tag-corporate-bonds","tag-fed","tag-qe","tag-quantitative-easing","tag-united-states","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51918"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51918\/revisions"}],"predecessor-version":[{"id":51919,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51918\/revisions\/51919"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}