On Tuesday and Wednesday, the Fed will deliver its semi-annual economic report, which will provide more clarity to the Fed's decision on bonds purchases and other monetary policy measures.
Recall that just this Monday, the central bank announced its decision to expand the corporate lending program, allowing the purchase of individual corporate bonds in addition to the exchange-traded funds that it is already buying.
In order to support the market, as well as to simplify the lending conditions, the Fed tweaked its program and added functions to its secondary market credit line.
The program now allows the purchase of corporate loans worth up to $ 750 billion.
The Fed said that it will purchase individual bonds in the secondary market, with a maturity of five years or less. The purchases will go with the ETFs that the Fed is already buying, and they are already balanced with investment grade indices and include some bond funds that track debts.
The purpose of such individual debt purchases is "to create a corporate bond portfolio based on a broad diversified US corporate bond market index," the Fed said in a press release.
"This index consists of all bonds on the secondary market issued by American companies that meet the minimum asset rating, maximum maturity and other criteria. This approach will complement the fund's ongoing purchases with exchange-traded funds," the report said.
The Federal Reserve has not yet launched a corporate line of credit
Nevertheless, this program will entail purchases in the primary market or from direct issuers, with the Fed being the sole investor. In addition, the main fund will target syndicated loans and bonds upon issue.
