Squashes multi-line JSON elements into one line

Describe the bug

Recently (noticed it today), when formatting JSON in a YAML document, it squashes the JSON subtree into one line.

Expected Behavior

If I remember correctly, it always left JSON subtrees alone, or even formatted them nicely.

Current Behavior

The JSON part becomes one line, even for very long elements, making them hard-to-read.

Steps to Reproduce

1. Enter YAML with some JSON, e.g.

foo:
  bar: {
        "x1": "x2",
        "y1": "y2"
       }

3. Trigger formatting (CTRL-ALT-F, or autoformat-on-save)
4. it turns it into

foo:
  bar: { "x1": "x2", "y1": "y2" }

Environment

• Windows (probably others, too)
• Mac
• Linux
• other (please specify)

(Note: I tried to disable most other extensions, and still have this effect. I asked a colleague, who could reproduce it.)

Start by reproducing the issue in VS Code with the YAML sample and the documented formatting commands. Trace the YAML formatting entry point and identify the behavior affecting embedded JSON; done means multiline JSON remains readable rather than being collapsed into one line.