Weekly Fixed Income Insights
Track what matters in fixed income: Macro news, policy moves and developments in the municipal and corporate markets.
Post mid-term elections, the bull case for bonds
November 4, 2026
Fixed income portfolio manager Kevin Lynyak discusses the bull case for bonds. Listen now:
The Fed: Tightening Without Urgency
November 3, 2026
Fixed income portfolio manager Kevin Lynyak recaps the last FOMC meeting. Listen now:
November 3, 2026
Macro update
The Federal Reserve (Fed) held rates unchanged at 3.75% to 4.00% at last week's Federal Open Market Committee (FOMC) meeting, but the tightening cycle remains intact. The decision passed by a 10 to two vote, with governor Lisa Cook and Beth Hammack favoring a 25 basis point (bps) hike, while the Committee upgraded its assessment of economic activity from solid to strong. Markets continue to assign approximately 75% odds to a December hike, reflecting a tightening bias without a sense of urgency (Bloomberg, 10/30/2026).
Treasury yields moved lower, and the curve steepened despite resilient economic growth. The two-year yield declined nine bps to 4.59%, the 10-year fell seven bps to 4.93% and the 30-year slipped one bp to 5.31%. Third-quarter GDP increased 3.4%, while the 10-year Treasury yield finished October 36 bps lower, suggesting investors interpreted the Fed's message as less urgent about additional near-term tightening (Bloomberg, 10/30/2026).
Credit markets continued to show signs of pressure from restrictive monetary policy. Investment-grade spreads widened three bps to 89 bps, near their year-to-date (YTD) wides, while high-yield spreads widened six bps to 345 bps. Chair Kevin Warsh acknowledged the widening in select credit spreads but indicated that tighter financial conditions remain consistent with the Fed's policy objectives (Bloomberg, 10/30/2026).
Treasury markets absorbed substantial new issuance while yields moved lower. A record $839 billion of bills, floating-rate notes and two-, five- and seven-year securities came to market last week. Investor attention now turns to Wednesday's Quarterly Refunding Announcement for potential changes to auction sizes and the outlook for future duration supply (Bloomberg, 10/30/2026).
Looking ahead, investor attention shifts to Tuesday's midterm elections and Friday's employment report, alongside JOLTS, ADP and ISM surveys. Consensus expectations call for approximately 65,000 payroll gains and unemployment of 4.2%. Absent a meaningful deterioration in labor-market conditions, another rate hike at the December 8–9 FOMC meeting remains firmly in play (Bloomberg, 10/30/2026).
Municipal bond update
AAA municipal yields moved lower across the curve last week. Two- and five-year yields declined seven and eight bps, respectively, while 10- and 30-year yields fell 13 and four bps, respectively. This price action left these benchmarks at 2.66%, 2.98%, 3.39% and 4.81%, respectively (LSEG, 10/30/26).
Five- to 20-year A-rated muni yields closed last week ranging from 3.16% to 4.73%, with related taxable-equivalent yields ranging from 5.34% to 7.99%, assuming a combined federal tax rate of 40.8% (LSEG, Parametric, 10/30/2026).
Muni mutual funds saw net inflows of $1.7 billion, with the mix suggesting continued tax-loss harvesting activity, as open-end funds surrendered $1.8 billion and ETFs received $3.5 billion (LSEG, JPMorgan, 10/28/2026).
This week's calendar remains light and below trend, with just $7 billion scheduled to enter the primary market (Ipreo, 10/30/2026).
Munis outperformed again last week, improving their YTD return to -0.48%, while the Bloomberg US Treasury Index also had a positive week, improving its YTD return to -0.47% (Bloomberg, 10/30/2026).
Municipal Index Yield to Worst
Sources: LSEG, Parametric, 11/3/2026. 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 0.46% for the week and 1.52% in October. The index underperformed like-duration Treasurys by -0.06% for the week and -0.30% in October (Bloomberg, 10/30/2026).
U.S. investment-grade (IG) corporate yields decreased across the curve last week. Two-, five- and 10-year yields decreased eight, nine and seven bps, respectively. Corporate yields are higher YTD, with two-, five- and 10-year yields up 109, 107 and 85 bps, respectively (Bloomberg, 10/30/2026).
IG mutual funds and ETFs experienced inflows of $4.4 billion, an increase from the prior week’s inflows of $1.5 billion. IG Corporate-only funds recorded inflows of $2.8 billion following last week’s inflows of $1.1 billion (Bloomberg, 10/30/2026).
Corporate one- to 10-year IG bond yields, which have increased 111 bps YTD, ended last week at 5.58% (Bloomberg, 10/30/2026).
Corporate Index Yield to Worst
Source: Bloomberg, 11/3/2026. 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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Municipal Bond Market Insight - The Long View
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