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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.

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March 31, 2026


Macro update



Markets are transitioning from a liquidity-supported, soft-landing narrative to a geopolitically-driven stagflation scare—with policy constrained and positioning unconvincing.


Oil continues to reprice higher, with geopolitical escalation in the Middle East broadening. Markets are increasingly pricing a prolonged supply shock, shifting the macro narrative toward stagflation risk rather than a clean disinflation path.


Despite the oil shock, rates rallied at the tail end of last week and to start this week. This follows a prior bear steepening move, leaving the curve broadly range-bound, but volatile beneath the surface.


The Fed’s reaction remains the central question. With rising inflation risks, mostly from energy, but softening growth signals, the most likely path is patience. Upcoming mid-term elections and the Fed leadership transition further raises the bar for near-term policy action.


Equities declined for a fifth consecutive week, with tech leading the slide. The combination of higher oil, wider spreads, elevated volatility and episodic liquidity suggests a tightening in financial conditions, even as Fed policy remains on hold. 


Municipal bond update



AAA municipal yields rose again materially across the curve last week. Two- and five-year yields increased by 16 and 19 basis points (bps), respectively. 10-year yields increased 18 bps, and 30-year yields increased nine bps. This sharp price action left these benchmarks at 2.45%, 2.70%, 3.18% and 4.54%, respectively (LSEG, 3/30/26).


Five- to 20-year A-rated muni yields closed last week ranging from 2.88% to 4.54%, with related taxable-equivalent yields ranging from 4.86% to 7.67%, assuming a combined federal tax rate of 40.8% (Parametric, LSEG, 3/30/26).


Muni mutual funds saw net outflows last week of $599 million, marking the first net outflow in 18 weeks. ETFs lost $123 million and open-end funds gave up $467 million (Lipper, JPMorgan, 3/25/26).


Tax-exempts well-underperformed Treasurys during another selloff last week, with the Bloomberg Municipal Bond Index decreasing 0.81%, compared with a 0.07% loss for the Bloomberg US Treasury Index. Munis are now down 0.58% year to date (YTD), compared with the Treasurys being down 0.66% (Bloomberg, 3/30/26).


Muni issuance eases to $7.5 billion this week, following last week’s year-to-date high of $14 billion (Ipreo, 3/30/26).


Municipal Index Yield to Worst



Sources: LSEG, Parametric, 3/31/2026. 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 -0.18% for the week and -2.0% MTD. The index underperformed like-duration Treasurys by -0.11% for the week and by -0.20% MTD (Bloomberg, 3/27/2026).


U.S. investment-grade (IG) corporate yields rose across the curve last week. Two-, five- and 10-year yields increased four, six and seven bps, respectively. Corporate yields are higher YTD, with two-, five- and 10-year yields up 49, 47 and 40 bps, respectively (Bloomberg, 3/27/2026).


IG mutual funds and ETFs experienced inflows of $974 million, a decrease from the previous week’s inflows of $5.9 billion. Corporate-only funds experienced outflows of $1 billion, following the previous week’s inflows of $231 million (JPMorgan, 3/20/2026).


Corporate one- to 10-year IG bond yields, which have increased 47 bps YTD, ended last week at 4.9% (Bloomberg, 3/27/2026).



Corporate Index Yield to Worst


 

Source: Bloomberg as of 3/31/2026. 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.