iBoxx $ Investment Grade Corporate Bond Fund (LQD)

[tw0122]

As LQD plunged, the shorts soared, rising to never before seen levels, send the index even lower and sparking even more shorting. By this point, only one thing could save capital markets - both bonds and stocks (why stocks? Because as a reminder the only buyer of stocks in the past decade have been buybacks; kill the bond market and suddenly companies can't issue debt to fund buybacks and it's bye bye, not buy buy, stocks): the Fed had to step in and buy bonds

However, on quad-witching Friday, March 20, the Fed did not do what so many traders were now expecting, and the liquidation continued with stocks in freefall, sending the Dow below 19,000, and to levels not seen since the Trump election.

By the following Monday, the Fed was trapped - either it unleashes not a bazooka but a "nuclear bomb" (as Paul Tudor Jones called it) and stabilizes the unprecedented panic gripping traders, or the market was about to close. It picked the former, and before the open on Monday, March 23, the Fed announced not only unlimited QE, but in an unprecedented move, Powell said he would also start buying loans and bonds in the secondary market, as well as the LQD.