Dark pool activity was detected in corporate bond ETFs on Thursday, April 9, 2020. Specifically, the corporate bond ETFs that we detected heavy dark pool activity in were SUSB and SUSC.

The Fed expanded its corporate bond buying program to $2.3 trillion last week and said there’s no limit to how much money they will pump into the economy. The expansion of the Fed’s lending facilities will support a sizable chunk of the junk bond market amid worries that containment measures to combat the COVID-19 outbreak could stay in place for longer than expected and place increased stress on U.S. businesses.

The Fed will now buy debt from non investment-grade firms as long as they were rated as investment-grade on March 22, a day after the Fed’s corporate bond-buying programs were announced.

I’m not adding any corporate bond funds to the GST Portfolio because I think the Fed is going to take HUGE losses in these junk bonds as many companies are going to go bankrupt and fail. I’m willing to entertain the idea of front-running the Fed in US Treasury bonds and in municipal bonds but NOT in corporate bonds and junk bonds. The risk versus reward ratio is just too high IMO.


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