Fed’s balance sheet tops $7 trillion, shows increased buying of corporate bond ETFs – MarketWatch




The numbers: The Federal Reserve’s balance sheet increased to $7.09 trillion for the week ending in May 20, up from $6.98 trillion in the previous week, the central bank said Thursday.

What happened: The Fed’s holdings in its corporate credit facility grew by $1.50 billion to $1.80 billion, after the central bank announced last Tuesday it would buy corporate bond exchange-traded funds.

The central bank’s support has driven up prices for these ETFs, especially for those focusing on investment-grade issuers.

See: Fed kicks off its buying of corporate debt ETFs

The iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, -0.07% is up 2.1% year-to-date, versus the 8.7% drop in the S&P 500 SPX, -0.77% over the same stretch.

Mortgage-bond purchases outpaced the Fed’s buying of U.S. government paper. Holdings of agency mortgage-backed securities rose by $79 billion to $1.86 trillion, while holdings of Treasurys increased by a more modest
Source…

Related Post