Fed’s Historic Step Into Credit Market May Cure ETF Dislocations
- Central bank will begin buying corporate bonds and credit ETFs
- LQD’s price and intraday net-asset value reunited as a result
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The Federal Reserve’s foray into corporate bonds and certain credit exchange-traded funds is helping restore order between the two markets.
After becoming unmoored in recent weeks as bond-market liquidity dried up, ETFs that stand to benefit from Fed buying are now rallying. That’s reuniting the price of those funds with the value of their underlying assets.