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Illustration: Eniola Odetunde/Axios

Barely five months into the year, U.S. investment-grade companies already have issued more than $1 trillion in debt — nearly as much as in all of 2019, which was well above average.

Why it matters: And buying shows no sign of letting up, thanks in large part to ultra-low interest rates and the Fed's promise of "no limit" purchases of Treasury, investment-grade corporate and even junk bonds.

What's happening: "Nearly $200 billion in debt has been issued in May so far as companies capitalize on growing risk-on attitudes," Bank of America research analysts said in a recent note to clients.

  • After $273 billion of outflows from bond funds in March, money has raced back into fixed income with positive inflows every week since mid-April, data from the Investment Company Institute show.

What to watch: Despite warnings of widespread downgrades, defaults and bankruptcies from various ratings agencies, credit analysts and the Fed itself, bond spreads are narrowing, indicating bullishness from investors as more of the U.S. economy opens for business.

  • "There's been a flood of issuance ... and the question is how much more can these spreads narrow," Subadra Rajappa, head of U.S. rates strategy at Société Générale, tells Axios. "My concern is that it seems like all this narrowing is a bit overdone."

Driving the news: Minutes from the Fed's latest policy meeting released Wednesday showed the central bank contemplating a program to cap the yields on short- and medium-term Treasuries known as yield-curve control — a policy employed by the Bank of Japan and Reserve Bank of Australia.

  • That would ensure borrowing costs stay low and likely encourage even more debt issuance from companies.

What could go wrong: Already warning that the economic damage from the pandemic will be deep and long-lasting, the Fed's latest financial stability report highlights the risk added by the growing corporate debt binge to exacerbate the coronavirus-driven recession.

Of note: Highly indebted "zombie" companies — firms that don't earn enough revenue to pay the interest on their debt — are one out of every six U.S. companies and currently control nearly 2.2 million jobs.

Flashback: "High levels of corporate debt likely won’t cause an economic downturn, but they may accelerate one as highly leveraged companies fail, forcing layoffs, decreasing aggregate demand and creating a downward spiral of bankruptcies and further layoffs," the U.S. Joint Economic Committee wrote in October 2019.

  • The committee cited Fed chair Jerome Powell himself, noting, “[a]highly leveraged business sector could amplify any economic downturn as companies are forced to lay off workers and cut back on investments.”

Go deeper: No, insurance doesn't cover that

Go deeper

Felix Salmon, author of Capital
Aug 27, 2020 - Economy & Business

America has a new central bank

Illustration: Eniola Odetunde/Axios

Today is a truly historic day in Fed history — one that will have a transformative effect on U.S. monetary policy for the foreseeable future.

Driving the news: For decades, the main job of central banks has been to keep inflation down. The Fed has now effectively changed that policy, to instead prioritize maximum employment.

Updated 2 hours ago - Sports

Olympics dashboard

Katie Ledecky in Tokyo. Photo: Ding Xu/Xinhua via Getty Images

🚨: Simone Biles won't compete in individual vault or uneven bars

🏊‍♀️: Katie Ledecky wins gold in women's 800m freestyle

🏊: Caeleb Dressel breaks world record in men's 100m butterfly, 3rd gold

🇬🇧: Britain wins gold in first-ever Olympic mixed 4x100m medley relay

🎾: Novak Djokovic defeated in Olympic semi-finals

💻: Japan tests teleporting games and "remote cheering"

Go deeper: Full Axios coverage

Updated 3 hours ago - Sports

Simone Biles won't compete in individual vault or uneven bars Olympic finals

Photo: Loic Venance/AFP via Getty Images

Simone Biles will not compete in the individual vault or uneven bars finals at the Tokyo Olympics, USA Gymnastics announced Friday.

Why it matters: USA Gymnastics said Biles, who previously withdrew from the individual all-around and team finals to prioritize her mental health, will continue to be evaluated to determine if she'll compete in the balance beam or floor exercise events.