Something shocking just happened: Treasury Secretary Steven Mnuchin cut off a $454-billion program the Federal Reserve uses to keep the bond market running.
A disaster, right?
You’d think so. After all, we’ve heard time and time again that the Fed will do whatever it takes to support the bond market through the crisis. Now a big source of cash needed to do that is gone.
The bond market’s response was even more surprising: crickets.
The junk bond–tracking SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares National Muni Bond ETF (MUB) held on to post-election gains after Mnuchin’s decision was announced.… Read more