scholarly journals Monetary policy and the corporate bond market: How important is the Fed information effect?

2021 ◽  
Vol 2021 (009) ◽  
pp. 1-37
Author(s):  
Michael Smolyansky ◽  
◽  
Gustavo Suarez ◽  
Keyword(s):  
Monetary Policy ◽  
Bond Market ◽  
Corporate Bond ◽  
Information Effect ◽  
Risky Assets ◽  
Corporate Bond Market ◽  
Market Participants ◽  
Economic Fundamentals ◽  
State Of The Economy ◽  
The U.S

Does expansionary monetary policy drive up prices of risky assets? Or, do investors interpret monetary policy easing as a signal that economic fundamentals are weaker than they previously believed, prompting riskier asset prices to fall? We test these competing hypotheses within the U.S. corporate bond market and find evidence strongly in favor of the second explanation—known as the "Fed information effect". Following an unanticipated monetary policy tightening (easing), returns on corporate bonds with higher credit risk outperform (underperform). We conclude that monetary policy surprises are predominantly interpreted by market participants as signaling information about the state of the economy.

Liquidity Patterns in the U.S. Corporate Bond Market

2015 ◽  
Author(s):  
Stephanie Heck ◽  
D. Margaritis ◽  
Aline Muller
Keyword(s):  
Bond Market ◽  
Corporate Bond ◽  
Corporate Bond Market ◽  
The U.S

scholarly journals Impact of Readability on Corporate Bond Market

2019 ◽  
Vol 12 (4) ◽  
pp. 184 ◽  
Author(s):  
Jieyan Fang-Klingler
Keyword(s):  
Transaction Costs ◽  
Annual Report ◽  
Bond Market ◽  
Corporate Bond ◽  
Credit Spreads ◽  
Annual Reports ◽  
Corporate Bond Market ◽  
Market Participants ◽  
The Us ◽  
The Impact

This paper investigates the impact of annual report readability on the corporate bond market. My findings indicate that in the US corporate bond market, firms with less readable annual reports tend to have higher credit spreads, higher credit spread volatilities, higher transaction costs, higher transaction costs volatility, smaller trade size, higher number of trades and higher number of trades volatility. This paper also provides the first answers to the question as to whether annual report readability matters to international market participants in the corporate bond market. My findings provide evidence that in the EUR corporate bond market, firms with more readable annual reports are associated with lower credit spreads.

scholarly journals Markets: Transparency and the Corporate Bond Market

2008 ◽  
Vol 22 (2) ◽  
pp. 217-234 ◽  
Author(s):  
Hendrik Bessembinder ◽  
William Maxwell
Keyword(s):  
Corporate Bonds ◽  
Bond Market ◽  
National Association ◽  
Corporate Bond ◽  
Transaction Data ◽  
Corporate Bond Market ◽  
The Public ◽  
The Impact ◽  
The U.S ◽  
Trade Press

For decades, corporate bonds primarily traded in an opaque environment. Quotations, which indicate prices at which dealers are willing to transact, were available only to market professionals, most often by telephone. Prices at which bond transactions were completed were not made public. The U.S. corporate bond market became much more transparent with the introduction of the Transaction Reporting and Compliance Engine (TRACE) in July 2002. Beginning that date, bond dealers were required to report all trades in publicly issued corporate bonds to the National Association of Security Dealers, which in turn made transaction data available to the public. In this paper, we describe trading protocols in the corporate bond market and assess the impact of the increase in transparency on the market. We review how TRACE has affected the costs that corporate bond investors paid to bond dealers for their transactions. We canvass the opinions of a variety of finance professionals and consider articles in the trade press to obtain a broader view of the impact of transparency on the corporate bond market

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