In a milestone for the government’s response to the COVID-19 pandemic, the Federal Reserve announced Wednesday it plans to begin selling the portfolio of corporate bonds purchased last year as part of efforts to keep financial markets functioning during the shutdown of the economy. The little-used program, the Secondary Market Corporate Credit Facility, provided an important psychological boost for markets, said Guy LeBas, chief fixed income strategist for Janney, on Twitter. The coming sales are unrelated to monetary policy, a Federal Reserve official said. Portfolio sales will be gradual and orderly, and “will aim to minimize the potential for any adverse impact on market functioning,” the Fed said, in a statement. The New York Fed will announce more details before sales begin. As of the end of April, the Fed held $8.6 billion in corporate bond ETFs and $5.2 billion of individual corporate bonds.
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