Yesterday, when discussing the Fed's latest $6.66 trillion balance sheet, we said that more than one month after the Fed announced its backstop for investment grade bonds and ETFs (followed shortly after by an expansion into fallen angel junk bonds), "what is most interesting is that so far the Fed has not yet purchased a single corporate bond, whether investment grade of fallen angel junk. In other words, without lifting a finger, the Fed's "whatever it takes" jawboning managed to inject trillions "in value" in countless debt and credit products."

Today, none other than the bond king Jeff Gundlach made this discovery, tweeting that "the Fed has not actually bought any Corporate Bonds via the shell company set up to circumvent the restrictions of the Federal Reserve Act of 1913.  Must be the most effective jawboning success in Fed history if that is true."

He's right: the Fed - or rather Blackrock which is doing the Fed's bidding in the open market as part of operation Covid bailout- has indeed not purchased a single bond, whether IG or HY.

And why should the Fed get its hands dirty and enter the corporate bond market if all it takes is a promise that it could enter the market. There is just one problem: if the lack of purchases comes as a surprise to Gundlach, what about the rest of the market, where the majority of investors appear rather confident that they are merely flipping bonds to the Fed when in reality they are just trading among each other in piece of paper that are already massively overvalued as we discussed last weekend in "Unprecedented Pace Of Corporate Debt Issuance Has Crippled Corporate Fundamentals", and where as Morgan Stanley pointed out, leverage is already exploding even as bond prices soar!