The headlines this morning are very interesting to me, and it reinforces how important the Fed decision was to buy corporate debt on 04/09.  This morning the futures are slightly higher ahead of the first day the Fed is going to be buying Corporate Bond ETFs.  This is an incredible statement and big deal because as we have said every day since that announcement – it was a game changer.  If you think about the capital structure, the risk in equities increases significantly if a company cannot raise money in the debt market – it is what just happened to United Airlines (UAL).  As a result, UAL is right near its low following the March crash.

Today starts the backstop for the Fed buying of corporate debt, which means the market could have the perception that any company could raise debt because the Fed could ultimately buy it.  The Fed is going to begin by focusing on Investment Grade debt and High Yield ETFs but even said they would soon start buying corporate debt directly.


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