The U.S. Federal Reserve will need to raise interest rates higher than officials are currently projecting if it is to wrestle inflation back under control, former U.S. Treasury Secretary Lawrence Summers said.

Outflows continued, rising significantly in the latest week, with Refinitiv Lipper reporting $2.136 billion coming out of municipal bond mutual funds, following outflows of $661.675 billion in the previous week.

The Investment Company Institute on Wednesday reported $2.258 billion of outflows in the week ending March 9, down from $3.502 billion of outflows in the previous week.

Sarah Bloom Raskin, whose views on the role of climate risk in bank supervision angered Republicans, said she has taken herself out of the running so the gridlocked Senate Banking Committee could move forward with the Biden administration’s other nominees to the Federal Reserve Board.

Bond investors are understandably cautious in response to recent market volatility and ahead of what is expected to be a Fed rate hike Wednesday, participants say.

As 2022 unfolds, a confluence of challenges has affected pricing, trading and fund flows in the muni market.

The market is being driven by the prospect of higher long-term inflation and the potential that the Federal Reserve may have to raise rates further than expected.

Democratic Sen. Joe Manchin said he won’t back President Joe Biden’s nominee for the Federal Reserve vice chair of supervision, Sarah Bloom Raskin — likely dooming her confirmation in the Senate given Republican opposition.

DASNY leads the calendar with $2.3 billion of exempt personal income tax bonds and $662.32 million of taxables. Potential volume is slated to be $5.11 billion, with $4.392 billion of negotiated deals and $718.1 million of competitive loans.

Sarah Bloom Raskin’s nomination to be Federal Reserve vice chair of supervision has taken another hit as key Senate Democrat Joe Manchin suggested President Joe Biden’s other four central bank nominees move forward without her.

The White House is rejecting Republican demands to split up its nominees to the Federal Reserve, with President Biden’s spokeswoman telling GOP lawmakers to show up and vote no on Sarah Bloom Raskin rather than further stalling consideration.

Federal Reserve Bank of Chicago President Charles Evans said the central bank should increase interest rates to close to its “neutral” setting this year, implying as many as seven quarter-point hikes.

Senate Democrats insist the GOP's boycott of President Biden's picks for the Federal Reserve is interfering with the central bank's handling of an economic crisis. But GOP lawmakers say the Fed is functioning fine and their concerns about nominee Sarah Bloom Raskin are material.

Lawmakers on the House Financial Services Committee clashed over the stalled nominations of Federal Reserve Chairman Jerome Powell and four others Wednesday. It was a prelude to the fireworks that could occur Thursday when Powell is scheduled to testify before the Senate Banking Committee.

All markets, but particularly municipals, are in uncharted territory once again, with volatility amplified by the crisis in Ukraine and a still somewhat uncertain path for the Federal Reserve and inflation.

February volume was $26.481 billion in 594 deals versus $37.052 billion in 981 issues a year earlier, bringing total volume for the first two months of the year to $51.426 billion, or 20% less than 2021.

Federal Reserve Bank of Atlanta President Raphael Bostic said he favors raising interest rates by 25 basis points at the Federal Open Market Committee’s March meeting but would consider a larger half-point move if monthly inflation readings fail to decline from elevated levels.

The new-issue calendar is $5.45 billion while 30-day visible supply sits at $11.14 billion. The largest deal of the week comes from the New York City Municipal Water Finance Authority with $793.83 million.

“With inflation well above the FOMC’s longer-run objective and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Fed said.

Investors yanked $1.154 billion out of municipal bond mutual funds in the latest week, Refinitiv Lipper reported.