The team at Bank of America thinks the Federal Reserve may announce a Commercial Paper Funding Facility tonight.
Previously used during the global financial
crisis, the operation is meant to boost liquidity in the commercial
paper market by having the Fed directly buy paper from issuers.
BofA expects such a move is needed ahead of what
might be imminent massive outflows from money market funds. “If the Fed
waits too long the (money market fund) outflow pressure could mount and
the risk of a large scale (money market fund) run could increase,” says
the team.
The spread between AA-rated paper of non-financial
companies vs. riskier overnight P2 paper jumped to 73 basis points late
last week – the widest premium since March 2009.
https://seekingalpha.com/news/3551803-fed-may-fire-another-bullet-tonight-bofa
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