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Weekly Fixed Income Insights


Track what matters in fixed income: Macro news, policy moves and developments in the municipal and corporate markets.

Bond Vigilantes Get Noisy

August 21, 2026

Fixed income portfolio manager Kevin Lynyak  talks about bonds. Listen now:

U.S. Banks 2Q26 Review

August 12, 2026

Fixed income portfolio manager Kevin Lynyak  on U.S. Banks 2Q26 review. Listen now:


September 22, 2026


Macro update



The Fed is hiking again, and the message was more important than the move. The Federal Open Market Committee (FOMC) delivered the widely expected 25-bps hike to a range of 3.75% to 4.00%, its first increase since 2023. However, chair Kevin Warsh’s description of the move as removing a “dose of accommodation” was distinctly hawkish. The median dot shows just one more hike in 2026, while markets are pricing a materially more aggressive path (Bloomberg, 9/18/2026).


The move produced a classic twist flattening. The two-year Treasury yield rose roughly 12 bps to 4.74% and the 10-year finished around 5.00%, while the 30-year rallied to roughly 5.33%. The front end is pricing a more forceful Fed, while the relative stability of the long end and lower inflation forwards suggest the market is giving the Fed some credit for defending price stability (Bloomberg, 9/18/2026).


Energy is now explicitly part of the Fed’s reaction function. Brent briefly approached $110 per barrel before ending the week near $104, and Warsh repeatedly cited commodity prices and geopolitical developments when explaining the decision. Persistent energy and input-cost pressure could pass into transportation, agriculture and construction costs, keeping inflation risk central to the policy outlook (Bloomberg, 9/18/2026).


Credit continues to absorb both higher rates and heavy supply surprisingly well, while strong all-in yields continue to draw demand. Investment-grade issuers brought about $55 billion of new supply, which was roughly four times oversubscribed. However, buyers increasingly favored the belly rather than the long end as the curve flattened (Bloomberg, 9/18/2026).


Looking ahead, this week is more about digesting the new Fed regime than major data. A heavy slate of Fed speakers and Wednesday’s Purchasing Managers’ Indexes should help clarify whether officials reinforce Warsh’s view that policy is still not meaningfully restrictive. Treasury also auctions $69 billion of two-year notes, $70 billion of five-year notes and $44 billion of seven-year notes, while attention is already shifting toward next Friday’s payroll report, the most important data release before the October FOMC (Bloomberg, 9/18/2026).



Municipal bond update



AAA municipal yields moved higher across the curve last week. Two- and five-year yields increased 19 and 10 bps, respectively, while 10-year yields rose five bps and 30-year yields were unchanged. This price action left these benchmarks at 3.01%, 3.25%, 3.75% and 4.87%, respectively (LSEG, 9/18/26).


Five- to 20-year A-rated muni yields closed last week ranging from 3.43% to 4.88%, with related taxable-equivalent yields ranging from 5.79% to 8.24%, assuming a combined federal tax rate of 40.8% (LSEG, Parametric, 9/18/2026).


After 21 weeks of inflows, muni mutual funds experienced a sizable $1.8 billion outflow, with open-end funds responsible for almost all the outflows and ETFs tacking on $40 million to the loss (LSEG, JPMorgan, 9/16/2026).


This week’s calendar steps up to $14 billion scheduled to enter the primary market, which likely includes some payback from last week’s lighter FOMC week (Ipreo, 9/18/2026).


Munis lost ground again last week, pushing their YTD return to -1.86%, while the Bloomberg US Treasury Index also had a negative week, depressing its year to date (YTD) return to -1.63% (Bloomberg, 9/18/2026).

Municipal Index Yield to Worst

Municipal Index Yield to Worst graph Sep 22


Sources: LSEG, Parametric, 9/22/2026. Assuming a top federal tax rate of 37%, plus 3.8% net investment income tax rate, 40.8% combined. For illustrative purposes only. It is not possible to invest directly in an index. Past performance is no guarantee of future results.



Corporate bond update



The ICE BofA 1-10 Year US Corporate Index returned -0.09% for the week and -0.98% month to date. The index outperformed like-duration Treasurys by 0.13% for the week and by 0.16% month to date (Bloomberg, 9/18/2026).


U.S. investment-grade (IG) corporate yields increased across the curve last week. Two-, five- and 10-year yields increased 10, six and one bps, respectively. Corporate yields are higher YTD, with two-, five- and 10-year yields up 110, 111 and 87 bps, respectively (Bloomberg, 9/18/2026).


IG mutual funds and ETFs experienced outflows of $418 million, a decrease from the prior week’s inflows of $4.7 billion. Corporate-only funds recorded outflows of $1.7 billion following last week’s inflows of $718 million (JPMorgan, 9/18/2026).


Corporate one- to 10-year IG bond yields, which have increased 106 bps YTD, ended last week at 5.5% (Bloomberg, 9/18/2026).



Corporate Index Yield to Worst


Corporate Index Yield to Worst graph Sep 22 

Source: Bloomberg, 9/22/2026. Past performance is no guarantee of future results. The index performance is provided for illustrative purposes only and is not meant to depict the performance of a specific investment.



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The views expressed are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Parametric and its affiliates disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Parametric are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Parametric strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results. All investments are subject to the risk of loss. Prospective investors should consult with a tax or legal advisor before making any investment decision. Please refer to the Disclosure page on our website for important information about investments and risks.