By Gayl Mileszko
Market Commentary
Goalkeepers
The World Cup literally kicks off next month in Mexico City and Guadalajara before moving to 11 U.S. venues from Boston to Los Angeles and Seattle to Miami. Fifteen cities will host a total of 48 teams, and a record-breaking number (104) of soccer matches over the course of five weeks. The games are only held once every four years and they can be a big moneymaker for local economies. Fanatic soccer fans, which number some 5 billion worldwide, have been saving and planning for travel to this year’s events since 2018, when the “united bid” from North America (the U.S., Canada, and Mexico) bested the one from Morocco. But with only four weeks to go until the first kickoff, those looking for last-minute tickets will need a fainting couch nearby. Resale prices for first round seats at Gillette Stadium for the Norway-France match run from $2,325. A ticket for the semifinals at Arlington’s AT&T stadium could cost you between $2,300 and $11,130. And, as one writer put it, some seats to the finals at MetLife Stadium in East Rutherford cost more than a two-week honeymoon in St. Barts.
Ball Hog
FIFA, a not-for-profit organization that operates like a for-profit business and derives nearly all of its revenue from the World Cup, had $9.5 billion in assets in FY25 and expects to rake in another $8.9 billion this year. They impose a 15% charge on top of every ticket price to both buyers and sellers, and report that there have been some 500 million ticket applications from fans in 200 countries for the 7 million available tickets. Per the hosting agreements with each city, FIFA takes all the income from broadcasting, sponsorship, ticket sales, and even ancillary services like parking fees, while the host cities are charged with paying for safety, security, and protection. Nevertheless, Philadelphia, which is simultaneously hosting many of America’s 250th birthday events plus the Major League Baseball All-Star Game, expects to generate more than $1 billion. Same for Atlanta, Los Angeles, and South Florida. The Dallas-Fort Worth region is counting on $2 billion from visitors spending an average of $5,000 per person for the highlight of the soccer — or as most in the world say football or fútbol – season.
Block Tackle
The FIFA World Cup is one of several national special security events this year, each a massive security undertaking coordinated by the U.S. Secret Service but involving law enforcement at every federal, state, and local level. FIFA anticipates that at least five million fans will travel to the United States for the World Cup and the potential for trouble is, obviously, high. Stadiums present prime targets for bad actors aiming to use the venues, and all the media attention that the national teams and matches attract, for propaganda and terrorism. Resources are being simultaneously deployed for all the U.S. sesquicentennial celebrations, so it will be an extremely active and stressful time for all in public safety — just weeks before the 25th anniversary of 9/11. Fortunately, the One Big Beautiful Bill provided $625 million to support security measures in the 11 host cities.
Red Flags
The FIFA Women’s World Cup takes place in 2027, so the only players on the pitch this summer are men, some of which play for nations in conflict. The only countries actually in active military conflict are the U.S. and Iran, battles that have been underway for two and a half months now. Peace talks are at a standstill since President Trump rejected the latest 14-point proposal as totally unacceptable. The Iranian Football Federation has said that its national team will “definitely” take part in the tournament but, not surprisingly, presented 10 conditions, including security guarantees, the ability to show its green, white and red flag, and play its national anthem, and the approval of visas for former members of the Islamic National Guard on the team roster. FIFA has confirmed Iran’s qualifications and has scheduled matches for them in the Inglewood, California SoFi stadium, and Seattle’s Lumen Field. The Kino Sports Complex in Tucson has been designated as its base camp and training site.
Center Circle in China
The flags of China and the United States are flying in Beijing where President Trump and Chinese leader Xi Jinping are meeting. No formal agenda has been made available, but they are bound to discuss trade, fentanyl, and the war in Iran. Seventeen CEOs of U.S. firms including Nvidia, Boeing, Apple, Tesla, BlackRock, Goldman Sachs, and Visa accompany the presidential delegation, so the unusual summit will likely end with lots of smiles, handshakes, purchases, and a few new or extended trade agreements. Wall Street will follow the announcements closely but, in the meantime, there are several other market-moving events underway.
Kickoff at the Fed
Congress has returned from its latest recess and is back at work trying to tackle a number of thorny issues. The Senate confirmed Kevin Warsh to a 14-year term on the Federal Reserve Board, where he previously served during the global financial crisis. He plans to chart a new course, shrink the balance sheet, assure members of his commitment to independence, plans to correct policy errors that have led to high inflation and keep the central bank within the white line markings of the monetary playing field.
Inflation
A regulation soccer ball should be inflated to a pressure of 0.6 to 1.1 bar so that it bounces evenly and allows for best control and performance. Back in 1996, the Federal Open Market Committee somehow quietly settled on a target inflation rate of 2% as best for our economy, but they never made it public until 2012. The Bureau of Labor Statistics reports that prices in the U.S. have now increased by about 27.6% since 2020, averaging 4.14% per year, down from a high of 9.1% in June of 2022. The data released this week show that the inflation rate has increased from 2.4% year-over-year in January to 3.8% in April, primarily due to increased energy and grocery costs. Consumers buying staples, buying, or renting homes or filling gas tanks, know that the real rate of inflation is much higher. Increases are quickly attributed to the disruption of key shipping lanes and the effective closure of the Strait of Hormuz during the conflict with Iran. But the roots of the problems go back to 2008, with policies that ballooned the Fed’s balance sheet to a high of $8.6 trillion and increased our M2 money supply to a record high $22.6 trillion.
Win-Loss Records
Plenty of economists still tout the resilience, the strength of the U.S. economy with our low unemployment rate, companies with healthy profits, consumer spending by wealthy households, and stock markets at record highs. From the perspective of some of the unidentified anomalous phenomena (UAPs/UFOs/) lately being released by the Pentagon, our economy might appear unsinkable. Back here on earth, financial markets are basically optimistic about the artificial intelligence revolution, believe that the Iran conflict will soon come to an end, and see interest rates eventually coming down. The cheerleaders, however, are a bit quiet this week as the economic data disappointed. NACHO, a new trader meme, began circulating: “Not a Chance Hormuz Opens.” Existing home sales in April and small business optimism was lower; CPI and PPI came in higher. Mortgage rates moved up, our federal debt at $31.27 trillion now exceeds GDP, and we now learn something shocking: one in three American men are not working or searching for a job. Multiple Wall Street banks have elevated their 12-month recession probability estimates to 40% and 50% while prediction markets like Polymarket and Kalshi place the 2026 odds at 23% and the 2027 odds at 42%.
Protective Gear
At this writing, 30-year Treasury yields have topped 5.00%, a sign that traders are now looking for the Fed to raise rates by June of 2027. The Wednesday auction of $25 billion of new 30-year bonds saw a 5.04% rate, the highest since 2007. The founder of DoubleLine Capital with $100 billion in assets previously announced that he is repositioning some of his bond funds, replacing higher coupon Treasuries with lower ones of the same maturity to hedge the odds of the U.S. needing to restructure debt by reducing coupons on outstanding bonds. He says that we cannot afford 6% coupons. The National Economic Council Director responded by saying that there is not a chance in a million years that this Administration would do anything that looks like a debt default. Main Street and Wall Street look at their own debt situations, our changing demographics, airfares, and gas prices, the terrifying headlines over advancements in AI cybersecurity hacking and the hantavirus and place their bets. It is a wonder that there is not more market volatility.
Box Scores: Municipal Bond Market Stats
No matter the daily ups and downs in equities and Treasuries, U.S. corporate bond issuance has hit record levels – exceeding $1 trillion so far this year. The municipal bond market as well continues to set new volume records. Bloomberg data show that year-to-date muni issuance now exceeds $195 billion, up 8% from last year’s high.
- So far in 2026, we have seen 27 senior living financings with combined par value of $2.31 billion, 70% non-rated,25% investment grade, with an average final maturity yield of 5.83%. HJ Sims has underwritten 8 of these transactions for borrowers in Iowa, Washington, Arizona, North Carolina, Florida, California, and New York.
- In the charter and private school sector year-to-date there have been 29 issues with combined par value of $988 million, including our $52.5 million non-rated financing last month for Explore Academy in Albuquerque.
- Last week, John Knox Village in Lee’s Summit, Missouri came with a $47.8 million BB+ rated financing structured with a 2061 final maturity that priced at 5.625% to yield 5.59%; Lebanon Valley Brethren Home in North Londonderry, Pennsylvania had a $30 million BBB rated financing that included 2056 term bonds priced at 5.125% to yield 5.23%; and the private Fountain Valley School in Colorado Springs sold $27.4 million of BBB-minus rated bonds with a 2036 maturity priced at 4.25% to yield 4.55%.
The HJ Sims Team
With a firm belief in the strength of the muni market both at a fundamental and technical level, HJ Sims is in the market this week with four municipal bond offerings. We see that yields are attractive to both borrowers and buyers, mutual and exchange traded funds continue to see solid weekly inflows for essential public purpose project financings, and muni index returns for the year currently exceed those of Treasuries, corporates, mortgage-backed, leveraged loans and preferreds.
- We are bringing a $35 million non-rated refunding through the Chesterfield County Health Center Commission for Lucy Corr Village, a life plan community in Chesterfield, Virginia with 341 units.
- We have the $68.9 million California Public Finance Authority offering for the 587-bed Park at South Stadium project in Fresno.
- Our $222.4 million non-rated financing for the new 177-unit rental senior living community Senior Dreams Foundation Endeavor Catalina Foothills is on tap, and
- Our $30 million Iowa Finance Authority remarketing for BBB rated Lifespace Communities is also worth a look.
Please reach out to your HJ Sims representative for more information.
Shots on Goal
Like you, we see a lot of enticing ads designed to “headline-proof” your portfolio and planning. Some peddle products and services that will let you “sleep like a baby.” In fast-moving times like these, there are no simple, one-size-fits-all, point and click solutions, no robots or AI agents for you to rely upon. Please reach out to your HJ Sims representative for real-world, common-sense approaches to goalkeeping from our banking, analytic, trading, sales, and operations teams. The pandemic firehose of federal stimulus has largely been shut off now and not every American family and not every business – large or small — are perched on the top tier of the K-shaped economy. Inflation is a vexing reality. Tax, regulatory and fiscal policies are changing, and we all will have a chance to weigh in on them in November. But for now, reach out for guidance from professionals in a firm that has worked through the astonishing ups and downs of our markets since 1935 so that we can help you, your family and business, take your best shots toward meeting your goals.