Jerome Powell has no such qualms, and two months ago the former lawyer shocked markets when supposedly in response to the coronavirus pandemic, the Fed decided it was high time to bail out all those investment grade companies that had spent trillions on stock buybacks as well as countless cash-burning shale PE portfolio companies, all of which were highly levered and needed a buyer of last resort to prevent their bonds from plunging, creating a self-fulfilling liquidation cascade and an avalanche of defaults. In short, the Fed said it would buy investment grade bonds and shortly after, fallen angel junk bonds, with the buying set to begin today through the Fed's Secondary Market Corporate Credit Facility (SMCCF) today. It's also why today is the first day the LQD is solidly higher in a month.

Here, courtesy of BMO's Daniel Krieter, is what traders should know:

The program will initially buy Eligible IG and HY ETFs, "with the preponderance of purchases" being IG ETFs. The Fed will buy individual bonds through this facility once Eligible Issuers certify eligibility (with the Fed providing the investment manager a list of companies that have completed self-certification). However, these certification materials have not yet been released, and so it could be a matter of weeks before the program is expanded to individual bonds.

Alongside the announcement of an operational SMCCF, the Fed released documentation around the various agreements made with vendors for this facility. Included in its Investment Management Agreement is a wealth of information of interest to spread market participants that was not previously made public.