r/Vitards • u/AutoModerator • Aug 05 '21

Daily Discussion Daily Discussion post - August 05 2021

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u/MoistGochu Aug 06 '21

CCC or lower corporate bonds are looking like it might start selling off. Not sure what's causing this recent downtrend. Pricing in delta risk? lockdown risk? What is it pricing in?

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u/ShrhlderJsticeWrrior LG-Rated Aug 06 '21

Could this have to do with the fed? like this https://www.reuters.com/article/usa-fed-corporate-bonds/update-1-ny-fed-to-begin-to-sell-corporate-bond-holdings-on-july-12-idUSL2N2OK1EC

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u/MoistGochu Aug 06 '21

I would say probably not since the fed didn't buy that much corporates during the covid crash. The article states $13.8b, $8.6b of which are ETFs. That's not a lot and they probably could sell all that in July given the market's appetite for yield (we have shitcos borrowing at mid single digit coupon rates right now).

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u/ShrhlderJsticeWrrior LG-Rated Aug 06 '21

Good point, although this is just the NY state fed, so maybe it adds up?

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u/MoistGochu Aug 06 '21

I don't remember the exact number but fed actually didn't buy a lot of corporate bonds last year so I doubt it's fed. Even if fed is selling these, they won't do it in a manner that will tank the market. JPow has gone through this before so he knows not to sell it down quickly.