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: 3Q Bank Earnings and the Hunt for Cockroaches
October 22, 2025
Fixed income portfolio manager Kevin Lynyak shares his insights into the current bond market. Listen now:
Fixed Income Five
October 13, 2025
Fixed income portfolio manager Kevin Lynyak shares his insights into the current bond market. Listen now:
October 28, 2025
Macro update
The five-week government shutdown is now second in length to the 2018–2019 35-day closure, and there’s still no sign of a compromise between Republicans and Democrats that would bring it to an end. Markets and the Fed are increasingly relying on private indicators for direction. Economists estimate that each week of shutdown trims roughly 0.1% from GDP growth (Bloomberg, 10/24/2025).
Q2 GDP was revised up to 3.8%, annualized. The Atlanta Fed’s model is tracking 3.8% for Q3, signaling resilient spending and industrial activity. September Consumer Price Index (CPI) data, which was delayed by the shutdown, was published Friday to support Social Security cost-of-living adjustments, revealing a headline month-over-month (MoM) gain of 0.3%, slightly below consensus expectations for 0.4%. The year-over-year (YoY) reading also was slower than expected, at 3% compared with 3.1% expected. Similar results came in for core CPI, at 0.2% MoM and 3% YoY compared with forecasts of 0.3% and 3.1%, respectively (Bloomberg, 10/24/2025).
The Fed meets this week on Tuesday and Wednesday for the October Federal Open Markets Committee (FOMC) meeting, with street expectations running high for another 25-basis point (bp) rate cut following Fed-speak that’s turned noticeably doveish in recent weeks. Fed funds futures fully price in 25-bp cuts at both the October 29 and December 10 FOMC meetings (Bloomberg, 10/24/2025).
Municipal bond update
Benchmark AAA municipal yields were mixed last week, with yields on bonds maturing inside of nine years up three to nine bps and yields on bonds maturing 10 years and longer down three to six bps (LSEG MMD, 10/24/2025).
Five- to 15-year A-rated municipal yields now range from 2.56% to 3.66%, with related taxable-equivalent yields ranging from 4.32% to 6.18%, assuming a combined federal tax rate of 40.8%. Turning to longer bonds, 20- to 30-year A-rated bonds range from 4.25% to 4.55%, with taxable-equivalent yields ranging from 7.18% to 7.69% (LSEG MMD, Parametric, 10/24/2025).
Muni mutual funds saw material inflows of $1.1 billion, with ETFs capturing $862 million and open-end funds contributing $261 million (JPMorgan, 10/22/2025).
The municipal primary calendar this week is less than half of the prior week, coming in at just $7 billion and continuing the saw-toothed issuance pattern. It’s not unusual for the market to take a breather during an FOMC week. We expect new supply to ebb as we head into the holiday season, which should enable muni pricing to further catch up with year-to-date (YTD) Treasury and corporate gains. (Ipreo, 10/24/2025).
Municipal Index Yield to Worst
Sources: LSEG, Parametric, 10/28/2025. 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 investment-grade (IG) corporate yields changed little across the curve last week. Two-year yields were unchanged, while five- and 10-year yields fell one and three bps, respectively. Corporate yields are lower across the curve YTD. Two-, five- and 10-year yields have fallen 71, 75 and 60 bps, respectively (Bloomberg, 10/24/2025).
The ICE BofA 1–10 Year US Corporate Index returned 0.17% for the week and 0.82% month to date (MTD). The index outperformed like-duration Treasurys by 0.14% for the week but have underperformed by -0.01% MTD (Bloomberg, 10/24/2025).
IG mutual funds and ETFs experienced inflows of $8.3 billion, an increase from the previous week’s inflows of $5.6 billion. Corporate-only funds experienced inflows of $1.1 billion, following the previous week’s inflows of $1 billion (JPMorgan, 10/24/2025).
Corporate one- to 10-year IG bond yields have decreased 78 bps YTD and ended last week at 4.4% (Bloomberg, 10/24/2025).
Corporate Index Yield to Worst
Source: Bloomberg as of 10/28/2025. 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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