Incredible credit dislocation brings in historic Fed action. The dislocation in the credit markets can be seen in the recent spike in Agency, Mortgage, and Corporate Yield Spreads to the 10-yr U.S. Treasury yield (Figure 1). In our view, these spikes likely do not even reflect the degree of dislocation and illiquidity in the various markets. In response, the Fed just announced they will buy a historic $107 billion in securities today.

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