Source: pxhere.com
In our 7/17/2020 weekly update, we noted a shift in Federal Reserve policy concerning its dual mandate of maintaining full employment while keeping a lid on inflation. So far, we've witnessed the Fed's aggressive response to the economic contraction and capital markets meltdown back in March-May that has resulted in a ballooning of its balance sheet to nearly $7 trillion and unprecedented policy measures to support the capital lending markets for U.S. corporations and municipalities. The Fed's actions have clearly solved the 'liquidity' problem as corporate and municipal bond spreads to safe-haven U.S.