Fixed Income Market Insights

• Articles are surfacing about the unprecedented and escalating attacks on the FED from President Trump. The attacks could backfire by hitting financial markets and the economy with higher long-term borrowing costs.

With Jackson Hole this week, we are seeing a lot of news regarding the FED. Most FED officials highlighted inflation risks as outweighing concerns over the labor market at their meeting last month.

• Brightline, the private rail line linking Orlando to Miami, refinanced $985M of junior debt at a record-high 14.89% yield, reflecting deep investor concern after delaying a July interest payment on $1.2B in munis.

• Federal Reserve officials left interest rates unchanged on 6/18/25 and continued to pencil in two rate cuts for 2025, citing high uncertainty over the economic outlook that has since diminished.

As we reported on June 10, Blackrock indicated that it is time to buy MUNI bonds, as supply is ample and prices are favorable ahead of the summer.

The Governor of Illinois reported plans to sign a $55.1 billion budget for 2026, which generates revenue from higher taxes on smokers, gamblers, and large multi-state businesses while pulling delinquent taxes into state coffers through a six-week amnesty program.

The NYC congestion toll pricing raised $215.7 million in the program’s first four months. Since January 5, most motorists have to pay $9 during peak hours to enter south of 60th Street in Manhattan.

• As we saw on May 21, long-term borrowing costs for all major economies are surging as investors question the government’s ability to cover massive budget deficits. The 30-year bond yields in the US and Japan reached multi-year highs.

Maryland’s credit rating was downgraded one level to Aa1 from Aaa by Moodys. This downgrade was a direct result of its exposure to shifting federal policies, according to a May 14 report.