As we expected, Secretary Mnuchin announced yesterday he would not approve the extension of the Fed 13(3) corporate, main street, TALF and munis facilities (A Year-End Credit Tightening Event Ahead?, 9 November 2020). As we understand it, these were his reasons:
The facilities have met their objectives, with corporate and muni issuance ample and spreads almost back to their pre-crisis levels.
Facilities use has been limited: Treasury funding was meant to be levered 10 times. Instead, the Treasury committed $195bn to the four facilities, but combined lending currently amounts to $24bn (Table 1).
These funds are usable for more immediate fiscal policy stimulus objectives.
TO READ THIS HIVE EXCLUSIVE
SUBSCRIBE TO MACRO HIVE PRIME