Re:BlackRock Is Bailing Out Its ETFs with Fed Money and Taxp...
by ikeboy on Friday June 05, 2020 @03:03PM
(#23432482)
Econ 101 distinguishes between buyers with market power and buyers without.
You also need to distinguish between the expectations channel and the purchase channel. The Fed announcing it's going to pump money into the economy decreases expectations of a severe ongoing recession, which reduces the probability of default, which raises bond prices.
Re:BlackRock Is Bailing Out Its ETFs with Fed Money and Taxp...
by loeg on Friday June 05, 2020 @04:52PM
(#23433826)
Yep! Some of the price and liquidity impact is the buying and some is just the announcement of buying. Levine had a nice column on it several days ago.
You also need to distinguish between the expectations channel and the purchase channel. The Fed announcing it's going to pump money into the economy decreases expectations of a severe ongoing recession, which reduces the probability of default, which raises bond prices.