Fed Sets Up the Next Big Carry Trade

The fed has announced that it has a new carry-trade that it wants everybody to participate in: borrow treasuries and buy corporates.  I have never witnessed such a bold (foolish?) move.  But they announced it loud and clear.  They will be buying treasuries to keep the long yields low for "an extended period of time". So obviously the trade is to short (borrow) 10 year treasuries and grab some matching duration corporates, munis, whatever.  They want that spread to shrink; and not on the back of rising treasury yields.  Subscribers can check the premium content for ways to participate in this government sponsored trade.