“Central Banks Are Now de facto Guarantors of the Corporate Bond Market”
Fears about the rising number of reopening coronavirus hotspots and economic threats were superseded by unbounded joy as the Fed announced it will buy secondary market corporate bonds direct[ly] rather than through ETFs, without any need for companies to certify their eligibility. That pressed the risk-on button — and markets recovered.
And so the free market sinks deeper into oblivion:
Central banks are now de facto guarantors of the corporate bond market.
What has all this QE Infinity and ZIRP interest rates created?… Where market prices have become meaningless as a result of financial asset inflation? Where junk bonds are priced like AAA securities, allowing private equity funds to thrive?
I am beginning to wonder if there is any point in thinking about markets any more… Just follow the central banks… don’t think. Just buy.
