VIEW: J.P.Morgan note that "the Fed will........>

FED: VIEW: J.P.Morgan note that "the Fed will begin buying corporate bonds on

June 16th through a new 3rd subcomponent of the SMCCF called "Eligible broad

market index bonds". Through this new "SMCCF-Index" approach the Fed will buy

individual bonds in a manner similar to the ECB, purchasing at their own

discretion without a need for the issuer to attest or sign up. This new approach

was not all that surprising given the extended delays in implementing individual

bond buying. Net net, this is positive for spreads, especially in the front-end,

but the magnitude is as of yet unknown. This is a positive for spreads as it

potentially unleashes just under $250bn of incremental HG bond buying ($5.5bn

has already been spent on ETFs) that was not likely to be spent so long as

issuer certification was required. On the other hand, the program duration and

size have not been modified and one could argue that the Fed has merely worked

out an implementation kink that the market was already looking past, as

evidenced by the nearly 200bp rally off the March wides. However, we have seen

time and time again with QE programs that actual execution matters."