Gary Siegel

The recent bank failures have changed market thinking about the Federal Reserve's next move.

Analysts opine on the Federal Open Market Committee meeting, how high interest rates will go and when the first cut may happen.

"I think the bond market is right, a recession is coming," said Liz Young, head of investment strategy at SoFi, "and the economic indicators reinforce that message."

Some analysts see the Federal Reserve cutting rates in late 2023, but others expect no rate cuts before 2024.

The Fed chairman said he believes the Fed is getting close to a sufficiently restrictive level, but they're not quite there. While two good inflation reports are good, "there's still a long way to go to price stability."

Markets took the news that it will soon be appropriate to increase the Fed funds target rate at a slower pace as good news.

It appears to have been a good time to request bonds as most of the largest issues were approved.

Investors pulled $3.843 billion from mutual funds in the week ending Oct. 26 after $3.876 billion of outflows the previous week, according to ICI.

With the Federal Reserve's hike pretty much expected, analysts will search for clues about future moves.

Munis were little changed while long UST improved and equities ended in the red after the FOMC raised the fed funds rate target 75bps to a range of 3% to 3.25% and members are leaning toward a rate of 4.4% by yearend.

While a full basis point increase will be discussed, analysts see the Fed increasing 75 basis points to a 3% to 3.25% range, with a split between those who say inflation is worsening and those that believe it peaked.

Investors will be greeted Tuesday with a larger new-issue calendar, estimated at $6.087 billion, up from total sales of $5.551 billion in the week of Aug. 29.

Outflows from municipal bond mutual funds increased as investors pulled $3.416 billion out of funds in the latest week, versus the $1.180 billion of outflows the prior week, according to Refinitiv Lipper data.

Don't expect much new information to come from Jackson Hole this year analysts say, as the data-dependent FOMC will rely on incoming economic numbers in September to decide the proper size rate hike.

John Luke Tyner, fixed income analyst at Aptus Capital Advisors, discusses yield curve inversion with Bond Buyer Managing Editor Gary Siegel. Tyner looks at recession possibilities and how the Federal Reserve’s actions will impact the economy, the yield curve and recession. (23 minutes)

Economists expect the FOMC to raise interest rates 75 basis points on Wednesday, although a full point hike could be on the table.

Daniel Berger, Senior Municipal Strategist at Refiniv Municipal Market Data, talks about what’s in store for the municipal bond market in the second half of this year. Are munis set to rally in the next few months? He looks at market volatility and talks about who holds muni bonds, bond fund outflows and discusses muni to Treasury ratios and the yield curve. Gary Siegel and Chip Barnett host. (15 minutes)

Monday's massive selloff contributed to investors pulling more out from the mutual fund complex. Exchange-traded funds saw $1 billion of outflows and high-yield investors yanked out $1.7 billion.

The 75 basis point hike, prompted partly by hotter-than-expected inflation data, is the largest since 1994.

Triple-A yield curves rose five to eight basis points. Volatility somewhat eased Tuesday as investors took pause ahead of the Federal Open Market Committee meeting.