The SMCCF supports market liquidity by purchasing, in the secondary market, corporate bonds issued by investment-grade U.S. companies, by U.S. companies that were investment grade before the onset of the pandemic and remain near investment grade, and by U.S.-listed exchange-traded funds (ETFs) whose investment objective is to provide broad exposure to the market for U.S. corporate bonds.
Moreover, fluctuations in the term premium on U.S. Treasury yields are driven in part by a significant “global” factor, which complicates efforts to treat the slope of the yield curve as a sufficient statistic for the expected path of U.S. monetary policy (Clarida, 2018c).