FI-Commentary-Page-Banners-2560x500

Weekly Fixed Income Insights


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

Fixed Income Five: January FOMC

January 29, 2026

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

Fixed Income Five: Preferred Securities Outlook for 2026

January 22, 2026

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


January 28, 2026


Macro update



Risk assets rebounded sharply after the annual World Economic Forum in Davos, with higher equities, credit spreads tightening and volatility falling, while worst-case escalation scenarios priced out. The dollar recovered only partially, and gold remained elevated at near-record highs. This signals that markets still assign value to geopolitical hedges, despite near-term de-escalation.


Bank earnings were broadly solid, with results confirming resilient loan growth, stable credit quality and continued moderation in delinquencies. However, equity reactions were mixed while investors focused on expense growth, capital markets revenue variability and capital ratios drifting lower amid elevated payout ratios and higher reel-world assets.


Higher-beta segments led investment-grade (IG) credit spreads to tighten modestly last week, alongside a heavy issuance calendar that included a $16 billion GS deal. This took year-to-date (YTD) IG supply to roughly $150 billion. Issuer activity is expected to pause near term amid heightened headline risk, but demand remains constructive. This suggests technicals are supportive absent of a renewed macro shock.


Backward-looking data showed strong momentum. Q3 GDP revised up to 4.4% and jobless claims remain low. However, underlying demand indicators like flat real private domestic final sales and housing weakness, plus seasonal distortions in claims, point to cooling growth ahead rather than re-acceleration.


The week marked a shift from pricing escalation to pricing postponement. Near-term geopolitical tail risks faded, but structural uncertainty around alliances, Fed leadership, and policy credibility continues to shape rates, foreign exchange and volatility dynamics.


Municipal bond update



AAA municipal yields were higher last week. Two-year yields were up one bps, five- and 10-year yields were up by four and three bps, respectively, and 30-year yields rose eight bps. This price action left these benchmarks at 2.21%, 2.28%, 2.66% and 4.29%, respectively.


Five- to 30-year A-rated municipal yields closed last week, ranging from 2.46% to 4.65%, with related taxable-equivalent yields ranging from 4.16% to 7.86%, assuming a combined federal tax rate of 40.8%. 


Muni mutual funds saw net inflows last week of $3.8 billion, with ETFs attracting $1.7 billion and open-end funds bringing in $2 billion (JPMorgan, 1/26/2026).


Tax-exempts again outperformed Treasurys last week, with the Bloomberg Municipal Bond Index increasing 0.19%, compared with a 0.12% loss for the Bloomberg US Treasury Index (Bloomberg, 1/26/2026).


With the Fed meeting, municipal issuance is light this week with only $4.4 billion on deck to sell this week. Next week should return to normal issuance (Ipreo, 1/26/2026).


Municipal Index Yield to Worst


null

Sources: LSEG, Parametric, 1/27/2026. 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



US IG corporate yields increased across the curve last week. Two-, five-, and 10-year yields all decreased one bps. YTD, corporate yields have increased with two-, five-, and 10- year yields up by three, five, and two bps, respectively (Bloomberg, 1/23/2026).


The ICE BofA 1–10 Year US Corporate Index returned 0.13% for the week and 0.18% month to date (MTD). The index outperformed like-duration Treasurys by 0.09% for the week and by 0.30% MTD (Bloomberg, 1/23/2026).


IG mutual funds and ETFs experienced inflows of $8.9 billion, a decrease from the previous week’s inflows of $10.3 billion. Corporate-only funds experienced inflows of $1.6 billion, following the previous week’s inflows of $3.9 billion (JPMorgan, 1/23/2026).


Corporate one- to 10-year IG bond yields that have increased one bps YTD ended last week at 4.5% (Bloomberg, 1/23/2026).



Corporate Index Yield to Worst


null 

Source: Bloomberg as of 1/27/2026. 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.



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 >>

Featured Content

Related Content

Explore all fixed income solutions

FIXED INCOME >>
LADDER FIXED INCOME >>
MANAGED FIXED INCOME >>
RESPONSIBLE FIXED INCOME >>

Get in touch

Discover how our fixed income solutions can address today’s challenges. Request a sample portfolio or transition analysis.

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.