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Wednesday, May 20, 2020

Plutocrat's ball - you just live here


"While the Fed says it does not seek to keep stock prices up, the market has rebounded some 30 percent since the institution began its giant program to pump trillions of dollars into financial markets. It has bought billions of dollars’ worth of U.S. Treasury bonds and government-insured mortgage bonds, keeping the prices of those bonds up and pushing yields, which move in the opposite direction, down.
The Fed also announced recently that it would start to buy exchange-traded funds that hold a diversified portfolio representing large parts of the more than $9 trillion corporate bond market and would move on to buying corporate bonds directly “in the near future.” Since such bonds serve as the basis for new borrowings, this lowers the cost of raising money for corporations tapping the bond markets."

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