Fed Unveils Open-Ended QE Including Corporate Bonds

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Zero Hedge: Coming into Monday, the Fed had a problem: 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 – given the political cover they have been provided – The Fed unveiled an unprecedented expansion to its mandate, announcing open-ended QE which also gave it the mandate to buy corporate bonds (in the primary and secondary market) to unclog the frozen corporate bond market, as we are just one step away from a full Fed nationalization of the market (only Fed stock purchases remain now).

Additionally, in addition to Treasuries, The Fed will buy Agency Commercial MBS all in unlimited size. Read More …

Opinion: The Dow Jones Index rose 1000 points from its pre-market low this morning. Traders celebrated as shorts (traders betting against the market) ran to cover their positions. Then it dropped again as the world watched a central bank take over the biggest economy in the world.

Yes, Virginia, the Federal Reserve now has the ability to print money in unlimited amounts and buy anything and everything it wants.

  • The Fed said it was launching two new bond buying programs that would purchase bonds directly from corporations
  • The Fed said its purchases of agency-backed mortgages would be expanded to include commercial mortgages
  • The Fed will help cities and states squeeze by the coronavirus, the Fed said it would expand its Money Market Mutual Fund Liquidity
  • The Fed said it expects to announce soon the establishment of a Main Street Business Lending Program
  • The Fed will enable the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration, and certain other assets.

It basically renders banking meaningless and puts all the risk on the Fed. Whatever happens with the financial markets now is anybody’s guess. It is up to the Fed.

To be clear, I never expected it to go this far this side of the rapture.