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As Fed Exits Credit, Investors See ‘Helicopter Parent’ Close By

  • Investors shrug off central bank’s plan to sell corporate debt
  • Market participants still counting on Fed’s future support
Updated on

The Federal Reserve’s plan to begin unwinding its unprecedented backstop of corporate debt is rekindling an idea that many have warned about: that investors are now convinced that the central bank will bail them out again if needed.

From Neuberger Berman to Invesco Ltd., investors say that the Fed’s intervention at the depths of the Covid-19 pandemic provides a model to follow for future crises, which isn’t necessarily what the central bank wanted to communicate.