Ford Shows Traders the Risk in Simply Following the Fed
Double-digit bond yields are a reminder that any sort of outlook about corporate America remains murky, regardless of what the Fed is buying.
Companies such as Ford have a difficult path forward.
Photographer: Anthony Lanzilote/BloombergEarlier this week, BlackRock Inc. suggested that traders follow the Federal Reserve as they make investment decisions. The world’s largest money manager will be “purchasing what they’re purchasing, and assets that rhyme with those,” said Rick Rieder, head of BlackRock’s global allocation team.
Set aside for now that BlackRock will literally be doing that as investment manager for the Fed’s two credit-market facilities. That mantra has caught on across Wall Street: Investors poured a record $7.66 billion into U.S. junk-bond funds in the week through April 15, the first period since the central bank announced that it would also purchase corporate bonds from “fallen angels” and even some high-yield exchange-traded funds.