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 10, 2026
Macro update
Payrolls put a September hike firmly back on the table. August nonfarm payrolls rose 162,000, well above expectations for roughly 55,000. The labor force expanded by 683,000 and participation increased to 61.6%. The report removed labor-market weakness as a major argument for staying on hold and initially pushed September hike odds toward two-thirds (Bloomberg, 9/04/2026).
Governor Christopher Waller made clear that inflation, not payrolls, will decide September. Waller indicated that continued progress toward the Fed’s 2% inflation target would support holding rates steady, while a hot August inflation print could warrant a hike. His comments pulled September pricing back toward 50/50, reinforcing that the jobs report made tightening possible, but this week’s inflation data will determine whether it’s necessary.
The rates selloff was concentrated in the belly of the curve. The 10-year is now around 4.78%, near its year-to-date highs, reflecting a repricing of the medium-term Fed path rather than a uniform duration selloff (Bloomberg, 9/04/2026).
Credit softened modestly, but the bigger issue this week may be supply, while all-in investment-grade yields remain close to year-to-date (YTD) highs. Dealer consensus is for roughly $70 billion of investment-grade issuance this week, alongside Treasury auctions and another roughly $18 billion municipal calendar (Bloomberg, 9/04/2026).
Looking ahead, inflation is the main event this week. Producer Price Index data arrives Thursday and Consumer Price Index (CPI) Friday. There’s a consensus of 0.4% month over month and 3.4% year over year headline CPI and 0.2% month over month and 2.4% year over year core CPI. After strong payrolls and Waller’s comments, a benign inflation print could keep the Fed on hold. However, an upside surprise would likely make a September hike the more compelling outcome (Bloomberg, 9/04/2026).
Municipal bond update
AAA municipal yields moved sharply higher across the curve last week. Two- and five-year yields increased 11 and 13 basis points (bps), respectively, while 10- and 30-year yields rose 14 and 15 bps, respectively. This sizable price action left these benchmarks at 2.62%, 2.93%, 3.47% and 4.70%, respectively (LSEG, 9/04/2026).
Five- to 20-year A-rated muni yields closed last week ranging from 3.11% to 4.68%, with related taxable-equivalent yields ranging from 5.25% to 7.91%, assuming a combined federal tax rate of 40.8% (LSEG, Parametric, 9/04/2026).
Muni mutual funds recorded just $138 million in inflows as of September 2. ETFs experienced $32 million in outflows, while open-end funds attracted $170 million (LSEG, JPMorgan, 9/02/2026).
This week’s calendar steps up to over $16 billion scheduled to enter the primary market (Ipreo, 9/04/2026).
Munis underperformed again last week, pushing their YTD return to -0.33%, while the Bloomberg US Treasury Index also lost ground, further pressuring its YTD return to -0.61% (Bloomberg, 9/04/2026).
Municipal Index Yield to Worst
Sources: LSEG, Parametric, 9/9/2026. 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 -0.17% for the week and 0.25% for August. The index underperformed like-duration Treasurys by -0.06% for the week but outperformed by 0.07% in August (Bloomberg, 9/04/2026).
U.S. IG corporate yields increased across the curve last week. Two-, five- and 10-year yields increased four, seven and seven bps, respectively. Corporate yields are higher YTD, with two-, five- and 10-year yields up 76, 81 and 67 bps, respectively (Bloomberg, 9/04/2026).
IG mutual funds and ETFs experienced inflows of $7.2 billion, an increase from the prior week’s inflows of $6 billion. Corporate-only funds recorded outflows of $937 million following last week’s inflows of $2 billion (JPMorgan, 9/04/2026).
Corporate one- to 10-year IG bond yields, which have increased 79 bps YTD, ended last week at 5.3% (Bloomberg, 9/04/2026).
Corporate Index Yield to Worst
Source: Bloomberg, 9/9/2026. 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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