Curve Commentary: August 31, 2026

Overview

Last week, the capital markets were focused on the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming.  The markets were seeking clarity on the Fed’s economic outlook and looking for clues about its strategy to bring inflation back to target.  Although Chairman Warsh did not reveal much, he did reiterate that curbing inflation is the central bank’s top priority and that inflation is not slowing meaningfully.  Chairman Warsh also described interest rates as the Fed’s “predominant tool” for controlling inflation.  These comments were received by the markets as hawkish and have prompted increased bets on a September rate hike.  This morning, Fed funds futures are now pricing in the likelihood of a Fed rate hike of 25bp at over 90% by the October 27-28 meeting.  To compound matters, renewed aggression in Iran is placing upward pressure on oil prices leading to further speculation about inflation.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

Over this past month, the Treasury curve is largely unchanged, flattened slightly with one-month yields increasing approximately 7 bps and 30-year yields dropping approximately three bps.  Muni yields, however, have moved in the opposite direction with a steepening yield curve as long yields sold-off approximately ten basis points and three-month yields rallied a little over four bps.  The muni curve rotated around the ten-year tenor with maturities past ten years selling-off and and maturities shorter than ten years rallying.  The largest moves in municipals were in the 15-20-year tenors with yields increasing roughly 15bps as heavy issuance, economic uncertainty and inflation fears placed upward pressure on longer yields.  Despite these concerns, the slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 29 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 73% for 10-year maturities.

Municipal/Treasury ratios generally increased (cheaper) for maturities past 5-years this past week, with the largest changes occurring past the 20-year tenor.  One-year ratios have again dipped below 60%, 10-year ratios tipped over 70% of Treasuries and, due to significant cheapening last week, 20-year ratios are again over 80%.  Investors seeking to maximize curve positioning with relative value can now go to the 14-year tenor and capture almost 85% of the 30-year municipal curve with less than half the maturity extension.  However, ratios in this part of the curve continue to be a challenge at close to 70% of Treasuries.  Flattening further out the curve has made extending maturities less rewarding, but ratios are cheaper with investors capturing over 87% of Treasuries at 30-years.  Although, the yield curve is very flat over these longer tenors with just two to three basis points of slope for maturities past 23-years. 

The Municipal the new issue calendar picks-up this week from $12.9 billion last week to $15.8 billion.  Notable deals include: State of New York Sales Tax Revenue Bonds with $1.93 billion, Salt River Project Agricultural Improvement & Power District has scheduled $1.35 billion, Chicago O’Hare International Airport is expected to offer $1.31 billion and Texas Transportation Commission has $1.12 billion on the calendar.  Last week, investors added approximately $1.4 billion to municipal bond mutual funds, up from $838 million the prior week, according to LSEG Lipper data.  Furthermore, redemptions and maturities in the next 30-days are expected to total $20.1 billion, according to data compiled by Bloomberg.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: August 24, 2026

Overview

Last Wednesday, the Treasury Department announced that it would increase buybacks of long-term bonds through its extended debt repurchase program.  The announcement was made after long-term Treasury yields hit the highest levels we have seen on nearly 20-years.  The move initially prompted a Treasury market rally, however Treasuries later sold-off as the market questioned the potential impact of increasing buyback operations from $2 billion to at least $4 billion in the $31.5 trillion Treasury market.  Furthermore, investors remain cautious amid stubbornly high inflation, mounting federal debt, and a new Federal Reserve chairman inclined to remain quiet.  Fed funds futures are now pricing in the likelihood of a Fed rate hike of 25bp at over 100% by the December 8-9 meeting; which, as of earlier this month, was thought to occur as soon as October.  Furthermore, this week bond traders will be paying attention to the GDP and personal consumption expenditures price index on Wednesday and Kevin Warsh’s first Jackson Hole Economic Policy Summit as Fed Chairman.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

Over this past week, the Treasury curve experienced a rally on the long-end while municipal bonds sold-off for periods past 4-years.  Recent issuance trends and adjustments to yield slopes have resulted in the intermediate portion of the municipal yield curve having more slope.  While inflation concerns, driven by volatile energy prices, continue to hold the long-end of the Treasury curve above 5% for maturities past 15-years.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 28 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 73% for 10-year maturities.

Not surprisingly, municipal/Treasury ratios have generally increased (cheaper) this past week, with the largest changes occurring around the 20-year tenor.  One-year ratios continue to hover over 60%, 10-year ratios remain just under 70% of Treasuries and, despite significant cheapening last week, 20-year ratios remain just below 80%.  Investors seeking to maximize curve positioning with relative value can now go to the 13-year tenor and capture over 80% of the 30-year municipal curve.  However, ratios in this part of the curve continue to be a challenge at approximately 70% of Treasuries.  Flattening further out the curve has made extending maturities less rewarding, but ratios are cheaper with investors capturing over 85% of Treasuries at 30-years.  Although, the yield curve is very flat over these longer tenors with just two to three basis points of slope for maturities past 23-years. 

The Municipal the new issue calendar drops this week from $17.4 billion last week to a more palatable, but still robust $12.9 billion.  Notable deals include: the City of Portland, which plans to sell $585.6 million of water system revenue bonds; the Commonwealth of Pennsylvania has scheduled $533.6 million; City of San Antonio, Texas is expected to offer $488 million; and, Pennsylvania State University is on the calendar with $458.4 million.   Last week, investors added approximately $838 million to municipal bond mutual funds, up from $758 million the prior week, according to LSEG Lipper data.  Furthermore, redemptions and maturities in the next 30-days are expected to total $22.5 billion, according to data compiled by Bloomberg.  Overall, investors continue to support munis but opportunities along the yield curve are currently favoring shorter strategies.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: August 17, 2026

Overview

The yield on 30-year Treasuries hit the highest level since 2007 today as investors struggle with inflationary pressures amid inflation that has exceeded the Fed’s target 2% rate for the past five-years.  Although both CPI and PPI prints from last week were better than economists had forecast, surging government spending amid stubborn inflation and faint prospects of peace in Iran have markets nervous.  In addition, energy prices continue to creep-up, with restricted oil traffic through the Strait of Hormuz.  ICE Brent Futures are now back in the low $90’s.  Furthermore, the last Fed meeting has left many market participants unconvinced of the Fed’s commitment to fighting inflation.  The impression of a stable labor market combined with elevated energy prices continues to sustain a narrative for Fed rate hikes later this year.  Fed funds futures are now pricing in the likelihood of a Fed rate hike of 25bp at 96% by the December 8-9 meeting; which, as of earlier this month, was thought to occur as soon as October.

ICE Brent Crude Oil Futures

Insights and Strategy

Over this past week, the Treasury curve is relatively unchanged, with some movement around the policy sensitive two-year tenor and some inflation fueled steepening on the long-end.  By comparison, municipal yields have been more stable with ratios driving yields up a bit around the 15 to 20-year tenors.  Inflation concerns with volatile energy prices continue to hold the long-end of the Treasury curve above 5% for maturities past 15-years.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 30 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 73% for 10-year maturities.

Municipal/Treasury ratios have generally declined (richer) this past week, with the largest changes occurring around the 10-year tenor.  One-year ratios are now just above 60% and 10-year ratios remain under 70% of Treasuries and 20-year ratios remain just below 80%.  Recent adjustments to yield slopes have resulted in the intermediate portion of the yield curve having more slope.  Investors seeking to maximize curve positioning with relative value can now go to the 13-year tenor and capture approximately 80% of the 30-year municipal curve.  However, ratios in this part of the curve continue to be a challenge at approximately 70% of Treasuries.  Flattening further out the curve has made extending maturities less rewarding, but ratios are cheaper with investors capturing 85% of Treasuries at 30-years.  Although, the yield curve is very flat over these longer tenors with just two to three basis points of slope for maturities past 23-years. 

The Municipal the new issue calendar ramps-up again this week with US state and local governments expected to sell around $17.4 billion of bonds.  Notable deals include: the City of Los Angeles Department of Airports with $2.71 billion; New York City Transitional Finance Authority Future Tax Secured Revenue has scheduled $1.92 billion; State of Michigan Trunk Line Revenue is expected to offer $706.4 million; and, Los Angeles County Metropolitan Transportation Authority is scheduled to bring $530.6 million to market.  Last week, investors added approximately $758 million to municipal bond mutual funds, down from $1.3 billion the prior week, according to LSEG Lipper data.  Furthermore, redemptions and maturities in the next 30-days are expected to total $24.3 billion, according to data compiled by Bloomberg.  Overall, investors continue to support munis but relative value versus Treasuries is becoming a more significant factor.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: August 10, 2026

Overview

Stalled negotiations in Iran and economic uncertainty have the Treasury market selling-off slightly this morning.  After dropping below $80 last week, ICE Brent Futures are now back in the mid $80’s this morning as anxieties in the capital markets regarding recent energy fueled inflation remain elevated.  In addition, CPI and PPI are both anticipated to be higher when they are released later this week.  The last Fed meeting also left many market participants unconvinced of the Fed’s commitment to fighting inflation.  The impression of a stable labor market combined with elevated energy prices continues to sustain a narrative for Fed rate hikes later this year.  Fed funds futures are now pricing in the likelihood of a Fed rate hike of 25bp at over 100% by the December 8-9 meeting; which, as of early last week, was thought to occur as soon as October.

ICE Brent Crude Oil Futures

Insights and Strategy

Over this past week, the Treasury curve was relatively unchanged while the municipal curve experienced a notable downward parallel shift.  This outperformance in munis is largely related to technical factors, such as recent inflows combined with bond maturities and calls.  Furthermore, the new issue municipal calendar, despite being elevated, witnessed underwriting scales being bumped to lower yields with new issues strongly received by the market.  Inflation concerns with volatile energy prices continue to hold the long-end of the Treasury curve above 5% for maturities past 15-years.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 30 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 73% for 10-year maturities.

Over the past week, Municipal/Treasury ratios have generally declined (richer), with the largest changes occurring around the five-year tenor.  However, over the past month we have seen a notable cheapening in ratios, particularly at the short-end of the curve as the market assesses the possibility of the Fed raising rates.  One-year ratios are now just above 60% and 10-year ratios are now slightly under 70% of Treasuries and 20-year ratios remain just below 80%.  Recent adjustments to yield slopes have resulted in the intermediate portion of the yield curve steepening.  Investors seeking to maximize curve positioning with relative value can now go to the 13-year tenor and capture approximately 80% of the 30-year municipal curve.  However, ratios in this part of the curve continue to be a challenge for many portfolios with yields in this part of the curve at only 70% of Treasuries.  Flattening further out the curve has also made extending maturities less rewarding, but ratios are cheaper with investors capturing 85% of Treasuries at 30-years.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors. 

The new issue municipal calendar drops a bit this week with US state and local governments expected to sell around $14.2 billion of bonds.  Notable deals include: Sutter Health Obligated Group, which plans to sell $1.6 billion; City of Atlanta GA Department of Aviation has scheduled $1.09 billion; State of Michigan Trunk Line Revenue is expected to offer $706.4 million; and, County of Miami-Dade Seaport Department plans to sell $656.6 million to the market.  Last week, investors added approximately $1.3 billion to municipal bond mutual funds, up from $761 million the prior week, according to LSEG Lipper data.  Furthermore, redemptions and maturities in the next 30-days are expected to total $25.8 billion, according to data compiled by Bloomberg.  Overall, investors continue to support munis but new issue pricings remain in focus.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: August 4, 2026

Overview

The bond market is showing some relief this morning on news that discussions are underway between the US and Iran following the US reportedly calling-off a major attack on the Islamic Republic.  After touching $90 last week, ICE Brent Futures are now back in the low $80’s this morning.  However, anxieties in the capital markets remain high following last week’s Fed meeting, which left many market participants unconvinced of the Fed’s undertaking to fight inflation.  The impression of a stable labor market combined with elevated energy prices continues to feed a narrative for Fed rate hikes later this year.  Fed funds futures are now pricing in the likelihood of a Fed rate hike of 25bp at over 90% by the October 27-28 meeting; which, as of early last week, was thought to occur as soon as September.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

In response to last week’s Fed meeting, the Treasury curve fell for maturities shorter than five-years as markets trimmed expectations of future rate hikes while the long end saw rates rise due to long-term inflation expectations.  Overall, the Treasury curve steepened while municipals demonstrated more resolve on the short-end of the curve and only sold-off slightly, by about three-basis points, on the long-end.  Inflation concerns with volatile energy prices continue to hold the long-end of the Treasury curve above 5% for maturities past 15-years.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 30 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 75% for 10-year maturities.

Over the past week, Municipal/Treasury ratios have generally declined (richened), with the largest changes occurring from on the long-end.  However, over the past month we have seen a notable cheapening in ratios, particularly around the 10-year tenor.  One-year ratios are now just above 60% and 10-year ratios are now over 70% of Treasuries.  However, 20-year ratios remain just below 80% and 30-year ratios are well below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 20-year part of the municipal yield curve remains attractive with steeper slopes.  Nevertheless, the shorter end of the yield curve has recently seen steeper slopes with 84 bps of slope from one to 10 years and 50 bps of slope from four to eight years.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors. 

The Municipal the new issue calendar ramps-up this week with US state and local governments expected to sell around $18 billion of bonds.  Notable deals include: the City of New York, NY, which plans to sell $1.5 billion; Intermountain Healthcare Obligated Group has scheduled $1.11 billion; San Francisco City & County Public Utilities Commission plans to sell $814.4 million in Wastewater Revenue Bonds; and, Black Belt Energy Gas District is expected to bring $800 million to the market.  Last week, investors added approximately $761 million to municipal bond mutual funds, up from $174 million the prior week, according to LSEG Lipper data.  Furthermore, redemptions and maturities in the next 30-days are expected to total $32.5 billion, according to data compiled by Bloomberg.  Overall, investors continue to support munis, but new issue pricings remain in focus.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: July 27, 2026

Overview

The bond market is showing some relief this morning following three straight nights of the US and Iran halting attacks.  After touching $100 last week, ICE Brent Futures are now back to around $90 this morning.  However, anxieties in the capital markets remain high as the bond market pays close attention in anticipation of this week’s Fed meeting.  Last Thursday, initial jobless claims fell to 187,000, the lowest level since 1969 according to Labor Department data.  The impression of a stable labor market combined with elevated oil prices is supporting the narrative for Fed rate hikes later this year.  Fed funds futures are now pricing in a Fed rate hike of 25bp at the September 15-16 meeting; which, as of last week, was thought to occur as soon as October.

ICE Brent Crude Oil Futures

Insights and Strategy

In response to last week’s aggressions, the Treasury curve jumped a bit around the policy sensitive two-year tenor while the municipal yield curve generally shifted higher.  Inflation concerns with volatile energy prices continue to hold the long-end of the Treasury curve above 5% for maturities past 20-years.  With tensions increasing in the Middle East last Thursday and rising oil prices, the municipal yield curve experienced some of the largest cuts in months with yields increasing roughly 12 bps per year from 2027 to 2056.  Overall, the municipal curve is now about a 20 bps higher this week following a parallel shift upward with the largest moves around the 15-year tenor and the smallest moves around the 1-year tenor, as investor position defensively.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 30 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 91% of the 30-year curve versus 74% for 10-year maturities.

Over the past week, Municipal/Treasury ratios have generally increased (cheapened), with the largest changes occurring from one to 10 years.  One-year ratios are now just above 60% and 10-year ratios now over 70% of Treasuries.  However, 20-year ratios remain just below 80% and 30-year ratios are well below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 20-year part of the municipal yield curve is attractive with steeper slopes and yields at approximately 80% of Treasuries.  However, the shorter end of the yield curve has recently seen slopes steepening with 83 bps of slope from one to 10 years and 50 bps of slope from four to eight years.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

The Municipal new issue calendar remains elevated this week with US state and local governments expected to sell around $12.4 billion of bonds.  Notable deals include: the Henry Ford Health System Obligated Group, which plans to sell $1.3 billion; Advent Health Obligated Group has scheduled $1.03 billion; Long Island Power Authority is expected to offer $946.1 million; and, County of Harris, Texas has a $665 million deal on the calendar.  Last week, municipal bond mutual fund inflows declined significantly from $1.36 billion of inflows the prior week to $174 million last week, according to LSEG Lipper data.  Overall, investors continue to support munis but new issue pricings remain in focus.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: July 20, 2026

Overview

This morning, the war in Iran continues to make headlines amid the possibility of a 10-day ceasefire.  With shipping traffic through the Strait of Hormuz reportedly at a virtual standstill, we are seeing some relief in oil prices this morning as optimism lifts for a potential peace deal.  Last week, reports on US consumer and producer prices, came in much cooler than economists expected.  This is important because these are the final inflation prints this month before the Fed’s meeting next week.  As a result, Fed funds futures are now pricing in a Fed rate hike of 25bp by the October 27-28 meeting (97.5%); which, was previously thought to occur as soon as September.  The current outlook for Fed policy has shifted from two quarter-point hikes by mid-2027, to one hike this year and possibly none next year with declining likelihood starting in June 2027.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

In response to last week’s inflation news, the Treasury curve dipped around the policy sensitive two-year tenor while the municipal yield curve shifted higher in response to technical factors.  Inflation concerns with volatile energy prices continue to hold the long-end of the Treasury curve above 5% for maturities past 20-years.  When comparing the municipal yield curve to the Treasury curve, the first 6 months immediately stand-out with the inverted shape of the municipal curve sharply contrasting with the steeply sloped Treasury curve.  Also, as discussed in greater detail below, record issuance and rich ratios are creating some resistance in munis.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 30 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield almost 91% of the 30-year curve versus 72.5% for 10-year maturities.

Over the past week, Municipal/Treasury ratios have generally increased (cheapened), although one-year ratios remain notably well below 60%.  In recent weeks, ratios have fallen well below several important reference points along the curve.  Ratios for 10-year municipal yields are now well under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  However, ratios have improved across the municipal yield curve over this past week, with the largest changes occurring from five to 10 years.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 10 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors. 

The Municipal the new issue calendar remains elevated this week with US state and local governments expected to sell around $11.2 billion of bonds.  Notable deals include: the New York City Transitional Finance Authority with $1.5 billion, the City of San Antonio Airport has $943.9 million, and West Valley-Mission Community College District is expected to bring $497 million to the market.  Last week, municipal bond investors added approximately $1.4 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Overall, investors continue to support munis, but new issue pricings remain in focus.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: July 13, 2026

Overview

The war in Iran continues to make headlines with Iran reportedly insisting that ships obtain permission and the US declaring the Strait is open to all vessels.  This uncertainty has resulted in oil continuing to price at higher levels, West Texas Intermediate is back in the mid 70’s this morning.  Inflation concerns with higher energy prices continue to move the long-end of the Treasury yield curve, with maturities past 20-years now eclipsing 5%.  On the short-end, we are experiencing upward pressure around the policy sensitive 2-year tenor amid speculation the Fed will raise rates sooner rather than later.  Fed funds futures are now almost fully pricing in a rate hike of 25bp in September (92%), which, as of last week, was previously thought to not occur until December.  This week we will be closely following the US data on CPI and producer prices as they will be the final inflation prints before the Fed’s meeting later this month.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

Treasury curves steepened a bit over the past week, while the municipal yield curve followed in sympathy.  However, the slope of the 10 to 30-year municipal curve remains near the tightest levels seen in over a year.  This flattening is the result of shifting expectation for longer maturities as markets adjust inflation expectations against the strength of the economy.  When comparing the municipal yield curve to the Treasury curve, the first 6 months immediately stand-out with the inverted shape of the municipal curve contrasting with the steeply sloped Treasury curve.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 34 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield almost 90% of the 30-year curve versus 71% for 10-year maturities.

Over the past week, Municipal/Treasury ratios have generally decreased (richened), with one-year ratios notably well below 60%.  Furthermore, ratios have recently fallen well below several important reference points along the curve.  Ratios for 10-year municipal yields are now well under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 10 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

The Municipal the new issue calendar remains elevated this week with US state and local governments expected to sell around $12.5 billion of bonds.  Notable deals include: the New York State Thruway Authority, which plans to sell $2.44 billion; Aquarion Water Authority Water System, with $2.37 billion; New Jersey Turnpike Authority, with $1.06 billion; and, Norton Healthcare Obligated Group is expected to bring $504 million to the market.  In addition, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $1.4 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: July 6, 2026

Overview

The Bureau of Labor Statistics released its Employment Situation report last week that noted fewer-than-expected jobs added and a drop in the unemployment rate to 4.2%.  Recently, anxieties have been high regarding the potential for rate hikes under new Fed Chairman Kevin Warsh.  Following last week’s report, fed funds futures are now anticipating the Fed will hike rates 25bp in December which was previously thought to occur as soon as October.  Declining geopolitical tensions and oil prices combined with a more dovish outlook for the Fed could create an accommodative environment for the record issuance we have seen in the municipal market this year.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

Treasury curves steepened a bit over the past week, while the municipal yield curve is almost unchanged.  Currently, the slope of 10 to 30-year municipal curve is at the tightest levels seen in over a year.  This flattening is the result of longer maturities responding to declining inflation expectations.  When comparing the municipal yield curve to the Treasury curve, the first 6 months stand-out with the inverted shape of the municipal curve contrasting starkly with the steeply sloped Treasury curve.  Although the yield curve has flattened from 10 to 30-years, Investors continue be rewarded for extending out the yield curve with the steepest yields in the 19-21-year maturity range.  The slope at the long-end of the municipal curve, past 20-years, remains relatively flat with a total slope of 32 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield 90% of the 30-year curve versus 70% for 10-year maturities.

Municipal/Treasury ratios have generally decreased (richened), ratios are now one to two percent lower than a week ago.  Notably, one-year ratios are well below 60%.  Ratios on the long-end for 20-years and longer, are now meaningfully lower.  Municipals have recently fallen well below several important reference points along the curve.  Ratios for 10-year municipal yields are now well under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 10 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors. 

Following last week’s holiday closures, the Municipal the new issue calendar is significantly higher with US state and local governments expected to sell around $15.1 billion of bonds.  Notable deals include: Aquarion Water Authority Water System Revenue Bonds with $2.37 billion, California State University has scheduled $1.8 billion, Massachusetts Port Authority is expected to offer $812 million and Massachusetts Bay Transportation Authority Sales Tax Revenue has $767.4 million on the calendar.  In addition, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $1.7 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: June 29, 2026

Overview

Following an escalation of tensions in the Strait of Hormuz, Iran and the US have reportedly agreed to stop mutual attacks.  Although there is an agreement in place, shipowners remain wary of crossing the strait.  As a result, oil prices are up again this morning and we are seeing Treasuries trade off a bit, particularly in the intermediate portion of the yield curve.  While this week is a holiday week with a lighter new issue calendar, accounts are likely to be attentive with over $100 billion in combined July and August redemptions.

West Texas Intermediate Crude Futures

Insights and Strategy

Both municipal and Treasury curves have flattened over the past week.  Currently, the slope of 2 to 10-year Treasuries is less than half of what it was in mid-May and near the tightest levels seen in over a year.  This flattening is the result of shorter-dated Treasuries anticipating rate hikes while longer maturities face inflation uncertainties.  However, the first 6 months of the curves could not be more different, with munis inverted and Treasuries steeply upwardly sloped.  Although the yield curve has flattened, Investors continue be rewarded for extending out the yield curve with the steepest yields in the 19-21-year maturity range.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 31 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield over 90% of the 30-year curve versus 70% for 10-year maturities.

Municipal/Treasury ratios have generally increased (cheapened) for periods shorter than 10-years, with one-year ratios 1% higher, but still below 60% of Treasuries.  Ratios on the long-end, for 20-yewars and longer, are now slightly lower.  Municipals have fallen well below several important reference points along the curve.  Ratios for 10-year municipal yields are now well under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 10 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

Due to the holiday closure later this week, the Municipal the new issue calendar is significantly smaller with US state and local governments expected to sell around $7 billion of bonds.  Notable deals include: Black Belt Energy Gas District with $920 million, Massachusetts Port Authority is expected to bring $812 million, Main Street Energy Inc. has scheduled $585 million and City of San Diego Water has $429.9 million on the calendar.  In addition, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $633 million to municipal-bond funds, according to LSEG Lipper Global Fund Flows.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: June 22, 2026

Overview

Last week the Federal Open Market Committee (FOMC) voted to hold the benchmark federal funds rate in a range of 3.5% to 3.75%, at the first gathering with Kevin Warsh as “Chairman.”  At the meeting, officials signaled growing support for rate hikes this year with half of the individual Fed members expecting to raise rates by the end of the year.  Furthermore, Warsh repeatedly reiterated the Fed’s commitment to fighting inflation.  Fed rate-hike expectations have recently shortened significantly with Fed Funds Futures pricing in two 25bp moves by March 2027.  Fed funds futures are now anticipating the Fed will hike rates 25bp as soon as October.

Implied Overnight Rate & Number of Hikes/Cuts

Insights and Strategy

The gap between two- and 10-year Treasury yields and between five- and 30-year yields has narrowed to the tightest levels in more than a year.  This flattening is the result of shorter-dated Treasuries anticipating rate hikes while longer maturities price-in a tougher inflation stance.  However, the municipal yield curve has responded in a more even fashion with an almost parallel shift downward with the first six-months remaining inverted.  Although the yield curve has flattened, Investors continue to be rewarded for extending out the yield curve, with the steepest yields in the 18-21-year maturity range.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 31 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield almost 90% of the 30-year curve versus less than 70% for 10-year maturities.

Over the past week, municipal/Treasury ratios have generally declined for periods shorter than 10-years, with one-year ratios now well below 60%.  Ratios on the long-end, for 20-yewars and longer, are now slightly higher.  Municipals have now fallen well below several important reference points along the curve.  Ratios for 10-year municipal yields are now well under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 12 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

The Municipal the new issue calendar remains relatively robust this week with US state and local governments expected to sell over $12 billion of bonds.  Notable deals include: the State of Georgia with $1.57 billion, Massachusetts Bay Transportation Authority Sales Tax Revenue is scheduled to sell $767.4 million, Santa Clara Unified School District is selling $438 million and Central Florida Expressway Authority is expected to bring $430.6 million to the market.  In addition, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $1.19 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Furthermore, June tax-exempt reinvestment proceeds are expected to reach approximately$54.5 billion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: June 15, 2026

Overview

This morning oil prices slid to a three-month low on news the US and Iran reached an agreement to reopen the Strait of Hormuz.  Details of the agreement are still preliminary; but, the Strait of Hormuz is anticipated to reopen following Friday’s signing.  The agreement marks the beginning of 60 days of talks regarding Iran’s nuclear program with the potential for continued military attacks if an understanding isn’t reached.  However, with oil prices currently around $80-85 per barrel, central bankers are now under less pressure to adjust rates than last week.  As a result, Fed rate-hike expectations have shifted further into the future, with Fed Funds Futures not fully pricing in a 25bp move until March 2027.  Although the markets are not expecting the Fed to adjust rates at its meeting this week, markets will be closely following Kevin Warsh’s first Fed meeting as “Chairman.”

West Texas Intermediate Crude

Treasuries rallied over this past week on anticipation of a deal in Iran and the opening of the Strait of Hormuz.  However, munis were little changed with yields only slightly higher from six to 14-years.  Investors continue be rewarded for extending out the yield curve with the steepest yields in the 18-21-year maturity range.  The slope at the long-end of the municipal yield curve, past 20-years, remains relatively flat with a total slope of 32 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield almost 90% of the 30-year curve versus less than 70% for 10-year maturities.

Insights and Strategy

Due to the relative underperformance of munis over the past week, Municipal/Treasury ratios have generally increased over the past week.  Looking back a bit, ratios shorter than 10-years, particularly those under one-year, have become dramatically richer over the past month with one-year and shorter ratios now 7.8% lower.   Municipal bonds have now fallen well below several important reference points along the curve: ratios for 10-year municipal yields are now well under 70% of Treasuries; 20-year ratios are below 80%; and, 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 12 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

Despite the abbreviated holiday week, the Municipal the new issue calendar remains relatively robust this week with US state and local governments expected to sell over $11 billion of bonds.  Notable deals include: the State of Washington with $1.52 billion; County of Miami-Dade FL Aviation Revenue has scheduled $637.9 million, New York State Housing Finance Agency is estimated to offer $509.6 million, and the State of Louisiana is expected to bring $375 million to the market.  However, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $625 million to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Furthermore, June tax-exempt reinvestment proceeds are expected to reach approximately$54.5 billion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: June 1, 2026

Overview

Inflation is showing signs of heating-up as the first inflation report under new Federal Reserve chief Kevin Warsh was released last week showing April consumer prices reached their highest level in almost three years.  The personal consumption expenditures price index ticked-up to 3.8% for the 12-month period ended in April, almost double the Fed’s 2% target.  However, this was not unexpected, as economists surveyed by Dow Jones forecasted a 3.8% rate.  In the Treasury Market, inflation expectations have increased anticipation the Fed will hike rates, resulting in the gap between five-year and 30-year yields narrowing to the skinniest levels seen in more than a year.  As a result, we have seen short and intermediate Treasuries underperform over the past month.  However, fund flows in the muni market remain robust, with investors adding approximately $2.3 billion last week, according to LSEG Lipper Global Fund Flows.  As a result, munis have held their ground better than Treasuries over the past month.

Insights and Strategy

Investors continue to be incentivized to extend out the yield curve with the steepest yield slopes in the 18-21-year maturity range and an overall slope of 49 bps.  However, slopes at the long-end of the municipal yield curve remain very flat with only 30 bps of slope from 21 to 30 years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield over 90% of the 30-year curve versus less than 70% for 10-year maturities.

Due to the outperformance of munis, Municipal/Treasury ratios have generally declined over the past week.  Municipal bonds have continued to price at richer levels as ratios fall well below several important reference points along the curve.  Ratios for 10-year municipal yields are now under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 11 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: May 18, 2026

Overview

Last week, there was a global selloff in government bonds as markets recalibrated inflation risk amid surging energy prices and speculation that central banks will tighten monetary policy.  The Bureau of Labor Statistics (BLS) released its CPI report last Tuesday, which indicated that prices rose 0.6% from March and 3.8% from a year earlier.  This is the highest annual reading since May 2023 and significantly above the 0.3% and 2.7% that economists had forecast.  To compound matters, on Wednesday, the BLS released its Producer Price Index which showed prices climbing 6% year-over-year in April.  The resulting selloff was propelled by climbing crude oil prices and a US-Chinese summit that delivered only modest results and no breakthroughs on the war in Iran.  Not surprisingly, the sentiment in the Fed funds futures market has fluctuated dramatically over the past month from the Fed cutting rates to the Fed now hiking rates as soon as next March.

Insights and Strategy

The selloff over this past week included both munis and Treasuries with Treasuries little changed for tenors under 2-years and 18-20 bps higher from five to ten years declining to 15 bps higher at 30-years.  Munis generally lagged behind Treasuries with a more uniform parallel shift upward by about ten bps across the yield curve.  Despite these developments, investors continue to be rewarded for extending out the yield curve with the steepest yields in the 18-21-year maturity range.  The slope at the long-end of the municipal yield curve has increased past 20-years, but remains relatively flat with a total slope of 32 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield over 90% of the 30-year curve versus less than 70% for 10-year maturities.

Although municipal/Treasury ratios generally declined over the past week, the short-end of the yield curve actually increased due to the muted response from Treasuries in this part of the curve.  Municipal bond ratios have now fallen just below several important reference points along the curve.  Ratios for 10-year municipal yields are under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 19 to 21-year part of the municipal yield curve is attractive with slopes of 12 to 13-bps per year and yields around 80% of Treasuries.  Although ratios past 20-years are more attractive, relative to Treasuries, the yield curve is very flat over these longer tenors and investors are not being appropriately compensated to take the additional risk.

The municipal new issue calendar continues to be heavy this week with US state and local governments expected to sell over $11 billion of bonds.  Notable deals include: the School District of Philadelphia, which plans to sell $797.5 million; Great Lakes Water Authority Water Supply System Revenue is expected to sell $754 million; Missouri Highway & Transportation Commission is on the calendar with $609 million; and, Massachusetts Educational Financing Authority is expected to bring $388.4 million to market.  Despite record issuance this year, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $1.3 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Furthermore, May tax-exempt reinvestment proceeds are expected to reach approximately $34.5 billion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: May 11, 2026

Overview

The Bureau of Labor Statistics released its Employment Situation report last Friday which reported nonfarm payroll increased by 115,000 jobs in April, despite rising energy costs from the Iran war.  This is significant as the markets contemplate the future rate path of the Fed and its dual mandate to promote both maximum employment and stable prices.  Collectively, the job gains in March and April mark the strongest two-month increase since 2024.  Recent employment data gives the Fed justification to maintain interest rates at current levels, for the foreseeable future, while they focus on inflationary risks from rising energy prices.

Insights and Strategy

Over the past week, both munis and Treasuries advanced with a modest decrease of four and a half to seven and a half basis points in Treasury yields for all but the shortest maturities.  Munis lagged with a more uniform response over the week with a parallel shift downward of about three basis points.  The biggest changes in Treasuries occurred in the 15 to 20-year tenor where rates fell by about seven basis points.  Despite these developments, investors continue be rewarded for extending out the yield curve with the steepest yields in the 18-21-year maturity range.  The muni yield curve has generally flattened over the past 3-months with short yields rising faster than longer maturities as the narrative for rate cuts and inflation has shifted.  As a result, the percentage of yields relative to the 30-year curve has increased for shorter maturities.  The long-end of the yield curve remains increasingly flat past 20-years, with a total slope of 26 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy 20-year maturities that yield over 90% of the 30-year curve versus less than 70% for 10-year maturities.

Municipal/Treasury ratios have generally declined over the past week as the short-end of the yield curve declined more than the long-end.  Municipal bonds have fallen just below several important reference points along the curve.  Ratios for 10-year municipal yields are under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve is attractive with slopes of 12 to 13-bps per year and yields approaching 80% of Treasuries.  Although ratios past 20-years are more attractively priced, relative to Treasuries, the yield curve is very flat over these longer tenors.

The Municipal new issue calendar picks-up again this week as US state and local governments are expected to sell over $13 billion of bonds.  Notable deals include: the State of Connecticut, which plans to sell $1.12 billion of bonds; the City of Atlanta Water & Wastewater Revenue has scheduled $1.1 billion; the City of Boston is expected to offer $609.3 million; and, Trustees of Columbia University in the City of New York is scheduled to bring $486.9 million to the market.  Despite record issuance this year, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $1.8 billion to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Furthermore, May tax-exempt reinvestment proceeds are expected to reach approximately $34.5 billion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: May 4, 2026

Overview

Last week the Fed voted to leave its policy rate unchanged at 3-1/2 to 3-3/4 percent citing developments in the Middle East as contributing to heightened uncertainty in their economic outlook.  Although this was the Powell’s final meeting serving as Fed chair, he has announced his intentions to remain on the Fed’s board after his term as chair ends.  Powell could potentially remain in place as a governor until that term ends in 2028.  The Fed does not meet again until June 16-17, when Kevin Warsh will host his first meeting as the new chair.

It is notable that as the market transitions from Powell to Warsh, the outlook has shifted.  At last week’s meeting, four Fed officials voted against the board’s decision with objections over language suggesting the central bank would eventually resume cutting rates.  Rising oil prices and a lack of progress in talks between the US and Iran has markets concerned that rates will remain higher for longer.  With the Fed’s dual mandate to promote maximum employment and stable prices, the markets are concerned that policymakers will focus on oil fueled inflation rather than employment.  Although the Fed funds futures market is currently anticipating that rates remain unchanged for the next 12-months, the outlook has shifted from cuts to hikes.

Insights and Strategy

Over the past week, munis and Treasuries have both sold-off with rates rising anywhere from five to 13-basis points for all but the shortest maturities.  The biggest changes have occurred around the policy sensitive two-to-three-year tenors while yields have risen about 5 bps for maturities past 14-years.  Despite these developments, investors continue be rewarded for extending out the yield curve with the steepest yields in the 18-21-year maturity range.  The long-end of the yield curve remains increasingly flat past 20-years, with a total slope of 26 bps from 21-30-years.  Due to this flat tail, municipal bond investors can currently buy maturities around 20-years that yield over 90% of the 30-year curve.

As a result of the prolific short maturity bid-wanted activity, municipal/Treasury ratios for one-year and shorter maturities are meaningfully higher than they were last week with ratios over 3% higher/cheaper.  Past five years, ratios slip a bit higher with demand extending out the curve to the longer maturities where relative yields are more appealing.  However, municipal bonds have fallen just below several important reference points along the curve.  Ratios for 10-year municipal yields remain under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve has become tempting with slopes of 12 to 13-bps per year.  Although ratios past 20-years remain attractively priced relative to Treasuries, the yield curve is very flat and does not reward extension over these longer tenors.

The Municipal new issue calendar picks-up a bit this week as US state and local governments are expected to sell over $12 billion of bonds.  Notable deals include: the City of Chicago Waterworks Revenue Bonds with $824.7 million, Texas State University System has scheduled $762.2 million, Chabot-Las Positas Community College District is expected to offer $531 million, and Indiana Municipal Power Agency is anticipated to bring $430 million to the market.  Despite record issuance this year, technical conditions remain supportive of the primary market.  Last week, municipal bond investors added approximately $615 million to municipal-bond funds, according to LSEG Lipper Global Fund Flows.  Furthermore, May tax-exempt reinvestment proceeds are expected to reach approximately $34.5 billion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: April 27, 2026

Overview

Last week, the markets shifted their focus from day-to-day geopolitical tensions to Kevin Warsh’s testimony to Congress.  The markets and Congress are both looking for indications of the independence of the Fed with Warsh acting as Chair.  However, after the Department of Justice dropped its criminal investigation into the current Chair Jerome Powell, Senator Thom Tillis announced his plans to support Warsh’s nomination.  It is notable that as the market transitions from Powell to Warsh, the rate-path has remained essentially unchanged.  Markets are currently anticipating Warsh will proceed as the next Federal Reserve chair with his first meeting acting as Chair on June 16-17.  The Fed funds futures market is currently anticipating that rates remain unchanged at this week’s meeting and for the overnight rate to remain essentially unchanged for the next 12-months.

Over the last month, munis have generally outperformed Treasuries.  Year-to-date, the Bloomberg U.S. Municipal Index, which includes investment grade tax-exempt municipal bonds, has returned 1.32% which has outperformed the Bloomberg US Treasury Index by 97bps.  This outperformance is notable given the level of issuance, which is currently 10.5%, and relatively weak ratios in the intermediate portion of the municipal yield curve.  Over the past month, Treasury yields were essentially unchanged while municipal yields fell approximately 15 to 20 bps per year from five to 30-years.

Insights and Strategy

Despite recent developments, investors continue be rewarded for extending out the yield curve with the steepest yield slopes in the 18-21-year maturity range.  On the long-end, the yield curve becomes increasingly flat past 20-years, with a total slope of 26 bps from 21-30-years.  Due to the flat tail, municipal bond investors can currently buy maturities under 20-years that yield almost 90% of the 30-year curve.

Due largely to the prolific short bid-wanted activity, municipal/Treasury ratios for one-year maturities are meaningfully higher than they were last week with ratios over 2% cheaper for 1-year and shorter maturities.  Past five years, ratios are a bit lower with demand extending out the curve to the longer maturities where relative yields are more appealing.  However, municipal bonds have fallen just below several important reference points along the curve.  Ratios for 10-year municipal yields are under 70% of Treasuries, 20-year ratios are below 80% and 30-year ratios are below 90% of equivalent Treasuries.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve has become tempting with slopes of 12 to 13-bps per year.  Although ratios past 20-years remain attractively priced relative to Treasuries, the yield curve is very flat over these longer tenors. 

This week, US state and local governments are expected to sell almost $10 billion of bonds.  Notable deals include: Dana-Farber Cancer Institute Obligated Group, which plans to sell $1.4 billion of bonds; Texas State University System has scheduled $762.2 million; and the Los Angeles Unified School District plans to offer $650 million.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: April 20, 2026

Overview

Day-to-day geopolitical tensions continue to weigh on the bond market, despite a ceasefire and the anticipated second round of peace talks.  Oil prices have been very dynamic with the Strait of Hormuz effectively closed, blocking oil shipments and pressuring global prices.  As a result, interest rate volatility in the bond market remains high with inflation continuing to drive rates.  Although last week’s economic calendar was relatively light, sentiment drifted throughout the week between the optimism of peace talks and continued growth concerns.  This week, the independence of the central bank may be tested as Kevin Warsh faces his confirmation hearing tomorrow.  The hearing is particularly important because it is taking place less than a month before the current Chair’s term expires, on May 15.  In addition, there is the potential for a stand-off with Republican Senator Thom Tillis vowing to block the confirmation until a Justice Department investigation is resolved.

Treasury yields were largely unchanged last week, with the biggest moves just past the policy sensitive two-year maturity as inflation, as the front end continues to be driven by inflation expectations.  Munis generally outperformed Treasuries despite outflows of $427 million, according to LSEG Lipper Global Fund Flows.  The biggest moves along the municipal yield curve occurred from 10 to 20-years, where the municipal curve is steepest, with yields falling roughly 5 bps in this range.  On the short-end of the municipal curve, there was little change with yields slightly higher due to elevated short maturity bid-wanted activity at the tail-end of tax season.  

Insights and Strategy

Despite last week’s moves, investors continue be rewarded for extending out the yield curve with the steepest yields in the 18-21-year maturity range.  On the long-end, the yield curve becomes increasingly flat past 20-years, with a total slope of 26 bps from 21-30-years.  Due to the flat tail, municipal bond investors can currently buy maturities under 20-years that yield almost 90% of the 30-year curve.

Due largely to the prolific short bid-wanted activity, short municipal/Treasury ratios are meaningfully higher than they were last week with ratios almost 2% richer for 1-year and shorter municipals.  On the long-end, ratios are a bit lower with demand extending out the curve to the longer maturities with more appealing relative yields.  However, municipal bonds have now fallen just below several important reference points along the curve.  Ratios for 10-year municipal yields are now under 70% of Treasuries and 30-year ratios are now below 90% of Treasuries.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve has become very tempting with slopes of 12 to 13-bps per year.  Although ratios past 20-years remain attractively priced relative to Treasuries, the yield curve is very flat over these longer tenors.  

This week, US state and local governments are expected to sell more than $10 billion of bonds.  Notable deals include: the Commonwealth of Massachusetts, which plans to sell $1.09 billion of bonds; Nebraska Public Power District is scheduled to sell $829.5 million; Texas Transportation Commission is expected to offer $750 million; and, Virginia College Building Authority is expected to bring $406.2m to market.  HJ Sims will also be in the market with Bonesta and its Alumus portfolio acquisition, which is expected to include $102,905,000 in Arizona and $59,725,000 in Washington and Porter’s Neck Village with $55,575,000 for its phase 2 expansion.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: April 13, 2026

Overview

Geopolitical concerns continue to weigh on the bond market despite last week’s announcement of a two-week ceasefire between the US and Iran.  This morning, tensions are elevated following a break-down of peace talks in Pakistan over the weekend.  As a result, rate volatility in the bond market remains high with inflation continuing to pressure rates.  Last week’s release of the core personal consumption expenditures index by the Bureau of Economic Analysis for February indicated an increase in prices of 0.4% from January, in-line with analyst expectations.  Last Friday’s release of the consumer price index indicated that inflation surged 0.9% in March, the fastest pace in nearly four years.  Furthermore, spiking fuel and fertilizer prices have economists anticipating continued inflationary pressures.

Munis outperformed Treasuries last week amid continued support as inflows of $866 million were added to municipal bond funds last week, according to LSEG Lipper Global Fund Flows.  Although the Treasury market was largely unchanged with as slight sell-off past 10-years, munis rallied for all maturities across the curve with the biggest moves from five to 15-years.  As a result, municipal/Treasury ratios are meaningfully lower than they were last week, with ratios generally 3% richer.  Furthermore, relative yields for municipal bonds have now fallen through important reference points in several spots along the yield curve.  Ratios for 5-year municipal yields are now under 65% of Treasuries and 10-year ratios are now below 70% of Treasuries.  On the long-end, 30-year municipal yields have now fallen below 90% of Treasuries.

Insights and Strategy

Despite last week’s moves, the steepest slopes along the municipal yield curve continue to reward extending duration.  Investors are rewarded for extending out the yield curve with appealingly steep yields with the yield differential between 2-year and 10-year munis, now around 66 bps, which is over double the spread at the end of last year.  On the long-end, the yield curve becomes increasingly flat past 20-years, with a total slope of 26 bps from 21-30-years.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve has become very tempting with slopes of 12 to 13-bps per year.  While ratios past 20-years remain attractively priced relative to Treasuries, the yield curve is very flat over these longer tenors.  Due to the flat tail, municipal bond investors can currently buy maturities under 20-years that yield almost 90% of the 30-year curve.

This week, US state and local governments are expected to sell more than $14 billion of bonds.  Notable deals include: City of Austin Airport System, which plans to sell $1.18 billion of revenue bonds; Banner Health Obligated Group, which is scheduled to sell $990.2 million; and, Southern California Public Power Authority is expected to offer $770 million.  HJ Sims will also be in the market with Lifespace Communities, Inc., which is expected to include $98,490,000 in bonds.  This week, we expect the markets will be closely following the producer price index for the month of March which is scheduled for release on Tuesday.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.

Curve Commentary: April 6, 2026

Overview

The capital markets continue to focus on developments in the Middle East, amid heightened uncertainty, as the April 7 deadline for massive strikes on Iranian energy infrastructure looms.  Daily volatility remains high as the market vacillates back and forth from anticipating a relatively short end to the war to threats of intensive and prolonged attacks.  The bond market ended last week with Treasury yields jumping three to four basis points across maturities on Friday, following significantly stronger-than-expected March payrolls data.  The unemployment rate ticked lower from 4.4% to 4.3%, which helped dispel anxieties of a softening labor market.

Over the past month, the Bloomberg US Municipal Bond Index (LMBITR) dropped 2.32% through March 31, which is the biggest monthly decline since September 2023.  As a result, year-to-date gains were essentially erased with the LMBITR index declining 0.18% through the end of the first quarter.  Generally speaking, high yield munis and shorter maturities were the better performing bond sectors with high yield tobacco bonds returning 1.47% and the one to two-year maturity bucket returning 0.64%.  By comparison the Treasury market was less impacted as demonstrated by only a 1.67% drop in the Treasury index through the end of the quarter.  

Insights and Strategy

Over the past month, the biggest moves in Treasury yields have been around the 2 to 5 year portion of the yield curve with yields now about 50bps higher than a month ago.  For munis, the biggest moves in yields have been around the 6 to 13-year year portion of the yield curve where yields are now around 50bps higher than they were a month ago.  In addition, bond traders are currently betting the Federal Reserve will keep interest rates steady this year, on signs of a stabilizing US labor market and uncertainty about the economic impact of war in the Middle East.

Municipal/Treasury ratios have increasingly become more appealing around the 10-year tenor with ratios now over 70%.  As a result, this has become a significantly more appealing portion of the curve to position with ratios declining slightly over the past week.  Muni/Treasury ratios for maturities shorter than 1-year are now yielding almost 65% of Treasuries, while 30-year munis continue to yield over 90% of equivalent Treasuries.  Although ratios past 20-years are attractively priced relative to Treasuries, the yield curve remains very flat over these longer tenors.  Due to the flat tail, municipal bond investors can currently buy maturities under 20-years that yield almost 90% of the 30-year curve.

Despite shifting muni/Treasury ratios, slopes along the municipal yield curve continue to reward extending duration.  Investors are rewarded for extending out the yield curve with appealingly steep yields with 2s10s (the yield differential between 2-year and 10-year munis) now around 64 bps, which is over double the spread at the start of the year.  However, 10s20s and 10s30s have both compressed from their mid-February highs, indicating flattening in these portions of the yield curve.  Overall, the yield curve remains steepest around both the 10-year and 20-year maturities.  As discussed above, the yield curve becomes increasingly flat past 20-years, with a total slope of 37 bps from 20-30-years.  For investors seeking to maximize curve positioning with relative value, the 18 to 21-year part of the municipal yield curve has become very tempting with slopes of 12 to 13-bps per year yields approaching 85% of Treasuries.

This week, US state and local governments are expected to sell more than $9.8 billion of bonds.  Notable deals include: Vanderbilt University Medical Center Obligated Group, which plans to sell $1.26 billion of bonds; City of Austin TX Airport System Revenue, which is scheduled to sell $1.18 billion; and, State of California is on the calendar with a $740.4 million issue.  HJ Sims will also be in the market with Explore Academy Albuquerque, which is expected to include $49.73 million in tax-exempt bonds and $1.8 million in taxable bonds.  This week, markets will be closely following durable goods orders for February on Tuesday, followed by the third estimate of fourth-quarter gross domestic product and PCE inflation data for February on Thursday.  Markets will also be parsing the minutes from the March Federal Reserve meeting for clues on the Fed’s future rate path, which are scheduled to be released on Wednesday.

Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.