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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.

Bond Vigilantes Get Noisy

August 21, 2026

Fixed income portfolio manager Kevin Lynyak  talks about bonds. Listen now:

Bond Vigilantes Get Noisy

August 21, 2026

Fixed income portfolio manager Kevin Lynyak  talks about bonds. Listen now:


September 2, 2026


Macro update



Federal Reserve chair Warsh put September firmly back in play in his first major Jackson Hole address. Warsh emphasized a resilient economy, easy financial conditions and the Fed’s commitment to returning inflation to 2%. The market responded by lifting the implied probability of a September hike from roughly one-third to more than one-half, with almost a full hike now priced by October (Bloomberg, 8/28/2026).


The Treasury curve bear-flattened sharply as the repricing was concentrated at the front end. The two-year yield rose about 12 basis points (bps) to 4.35%, while the 10-year was roughly unchanged near 4.72%, and the 30-year declined to around 5.21%. The 2s10s curve flattened roughly 13 bps, reversing part of the steepening that had dominated August (Bloomberg, 8/28/2026).


Credit tightened despite the hawkish rates repricing. Investment-grade (IG) spreads tightened two to three bps, while high-yield spreads tightened nine to 10 bps. The resilience of spreads suggests investors continue to differentiate between tighter monetary-policy expectations and deterioration in corporate fundamentals (Bloomberg, 8/28/2026).


The summer issuance lull finally arrived. Only $6.8 billion IG supply priced last week, taking August issuance to roughly $156 billion and year-to-date (YTD) supply to about $1.48 trillion. Dealer consensus is for just $5 billion this week, which should provide some near-term technical support after an unusually heavy summer of issuance, particularly from AI-related borrowers (Bloomberg, 8/28/2026).


Looking ahead, labor data will determine whether September becomes more than a coin flip. Job Openings and Labor Turnover Survey and Institute for Supply Management data arrive Tuesday before Friday’s employment situation report, where expectations call for only 55,000 new jobs and unemployment holding steady at 4.1%. A firm report would reinforce Warsh’s hawkish message, while another soft payroll print could quickly pull pricing of a September hike back down (Bloomberg, 8/28/2026).



Municipal bond update



AAA municipal yields were unchanged to modestly higher across the curve last week. Two- and five-year yields were unchanged, while 10- and 30-year yields increased two and three bps, respectively. This modest price action left these benchmarks at 2.51%, 2.8%, 3.33% and 4.55%, respectively (LSEG, 8/28/26).  


Five- to 20-year A-rated muni yields closed last week ranging from 2.98% to 4.52%, with related taxable-equivalent yields ranging from 5.03% to 7.64%, assuming a combined federal tax rate of 40.8%. (LSEG, Parametric, 8/28/2026).


Muni mutual funds recorded $1.4 billion in inflows as of August 26. ETFs attracted $1.2 billion, while open-end funds contributed $236 million (LSEG/J.P. Morgan, 8/26/2026).


This week’s calendar steps up to over $14 billion scheduled to enter the primary market (Ipreo, 8/28/2026).


Munis underperformed again last week, trimming their YTD return to 0.49%, while the Bloomberg US Treasury Index gained some ground, limiting its YTD loss to -0.47% (Bloomberg, 8/28/2026).

Municipal Index Yield to Worst

Municipal Index Yield to Worst Sep 1


Sources: LSEG, Parametric, 9/1/2026. 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 0.03% for the week and 0.28% for the month. The index outperformed like-duration Treasurys by 0.14% for the week and by 0.09% for the month (Bloomberg, 8/28/2026).


US IG corporate yields were mixed last week. Two- and five-year yields increased eight and four bps respectively, while 10-year yields decreased two bps. Corporate yields are higher YTD, with two-, five- and 10-year yields up 73, 74 and 60 bps, respectively (Bloomberg, 8/28/2026).


IG mutual funds and ETFs experienced inflows of $6 billion, an increase from the prior week’s inflows of $5.4 billion. Corporate-only funds recorded inflows of $2 billion following last week’s inflows of $475 million (JPMorgan, 8/28/2026).


Corporate one- to 10-year IG bond yields, which have increased 71 bps YTD, ended last week at 5.2% (Bloomberg, 8/28/2026).



Corporate Index Yield to Worst


Corporate Index Yield to Worst Sep 1 

Source: Bloomberg, 9/1/2026. 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.