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    jk's Avatar
    jk is online now Shadow Fed, iTulip Select Member, The Brain
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    May 2006
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    Default Re: Thank you!

    didn't the fed's role as regulator for the banking system ALREADY put them in charge of financial system stability? of course they famously have ignored this role since at least greenspan. i guess the difference is creating stability by regulating financial system players versus doing it by guaranteeing asset prices.

    but regs, of banks but also of other entities such as money market funds, pensions, etc, do appear to be used to force more purchases of treasury paper as issuance continues to skyrocket.

    we should start a pool on when the fed ceases qt, and when it resumes qe.

    ========
    corporate spreads are widening because balance sheets were gutted to fund share buybacks and thus increase earnings per share. add that to the fact that half the investment grade universe is rated bbb. a one level downgrade into junk territory will force many institutional holders, mutual funds, etc with investment grade mandates to sell huge volume into a no bid/very low bid market, which will imo hit the rest of the investment grade market as well, except for the very highest quality issues.
    Last edited by jk; 12-11-18 at 10:28 AM.

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