We study liquidity conditions in the corporate bond market during the COVID-19 pandemic, and the effects of the … unprecedented interventions by the Federal Reserve. We find that, at the height of the crisis, liquidity conditions deteriorated … "lean against the wind" and bid-ask spreads declined. To study the causal impact of the interventions on market liquidity …

compares the Federal Reserve's actions with the literature on optimal policy in a liquidity trap. The theory suggests that, to … securities markets can restore liquidity with fewer government funds than extending credit to the originators of loans …