An image of a building window

Weekly Fixed Income Update


Interest rates, inflation, central bank action—all these and more can impact fixed income. Stay on top of the market with our weekly update.

July 8, 2025


Macro update



US Treasury (UST) yields rose moderately during the holiday-shortened week, with the 10-year UST starting with a yield of 4.23% and closing 12 basis points (bps) higher, at 4.35%. 


Two primary factors contributed to the move: Congress passing the President’s budget proposal and the Payroll Situation Report for June.


Passage of the budget bill fulfilled a number of President Trump’s campaign promises and extended tax rates that were set to expire at year end from the Tax Cuts and Jobs Act of 2017. The Congressional Budget Office estimates that the bill will add $2.4 trillion to the deficit. 


The June Payroll Situation Report revealed above-expectations headline data and once again tempered market expectations for rate cuts this year. New jobs created handily eclipsed market forecasts of just 106,000 at 147,000 and brought the three-month moving average up to 150,000. The unemployment rate dipped unexpectedly to 4.1%, thwarting expectations of 4.3% and easing from last month’s 4.2%. It appeared to be yet another solid non-farm payrolls report.


This week’s data calendar is rather light and includes mortgage applications, the FOMC meeting minutes from June, initial jobless claims and the federal budget debt summary for June. 



June 27, 2025

Fixed income portfolio manager Kevin Lynyak shares his insights into the current bond market. Listen now:





Municipal bond update



Benchmark AAA municipal yields were mildly lower to unchanged last week. Two-, five- and 10-year yields lowered six, seven and five bps, respectively. 30-year yields remained unchanged (LSEG MMD, 7/3/2025).


Muni relative value compared with the 10-year Treasury was 74% by Friday’s close and remains sharply higher than the two-year average of 66% (LSEG MMD, 7/3/2025).


Five- to 15-year A-rated municipal yields ranged from 2.81% to 4.27%, with related taxable-equivalent yields ranging from 4.75% to 7.21%, assuming a combined federal tax rate of 40.8% (LSEG MMD, Parametric, 7/3/2025).


Mutual funds experienced their tenth consecutive week of net inflows, at $959 million. Open-end funds saw the lion’s share, attracting $736 million, with ETFs contributing $223 million. (LSEG Lipper, JPMorgan 7/2/2025).


The upcoming primary market appears to include some pay-back from last week’s holiday-impacted $3 billion calendar, with more than $13 billion scheduled to enter the new-issue market. Next week’s issuance may offer a clue as to whether a summer supply-slowdown is developing (Ipreo, 7/3/25).


Corporate bond update



US investment-grade (IG) corporate yields were mixed across the curve last week. Two- and five-year yields rose five and three bps, respectively, while 10-year yields were unchanged. Corporate yields are lower across the curve year to date (YTD). Two-, five- and 10-year yields have fallen 29, 36 and 22 bps, respectively (Bloomberg, 7/3/2025).


The ICE BofA 1–10 Year US Corporate Index returned 0.04% for the week and 1.32% in June month to date. The index outperformed like-duration Treasurys by 0.34% during the week and 0.29% in June (Bloomberg, 7/3/2025). 


IG mutual funds and ETFs experienced inflows of $10 billion, an increase from the previous week’s inflows of $5.3 billion. Corporate-only funds experienced inflows of $2.2 billion, following the previous week’s inflows of $2.3 billion (JPMorgan, 7/3/2025).


Corporate one- to 10-year IG bond yields have decreased 37 bps YTD and ended last week at 4.8% (Bloomberg, 7/3/2025).



Investing in fixed income securities involves risk. All investments are subject to loss. Learn more.

ADVISOR TOOL


Laddered Interest Rate Scenario Tool


Which fixed income asset class is just right for each investor? Explore possible ways to achieve optimal after-tax yield.

Use our online tool to showcase potential benefits of tax-managed and customized laddered bond portfolios.


 

TRY IT NOW >>

Fixed income banner

SOLUTION

Parametric Fixed Income

Even in an uncertain rate environment, bond exposure is important. Our fixed income solutions span the maturity curve and offer the flexibility to address any investor’s needs.

Corporate bond market insight banner

INSIGHT

Corporate Bond Market Insight

Each month we recap the corporate bond market’s performance, delving into the numbers and offering forward-looking commentary. Click below for the latest edition.

Municipal bond market insight banner

INSIGHT

Municipal Bond Market Insight

Each month we recap the muni bond market’s performance, delving into the numbers and offering forward-looking commentary. Check out the latest edition.

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.