FOMC

The large drop in yields since the end of October can be reflected in sentiment that investors expect a potentially dovish Fed next year, and that a soft landing narrative gives them "permission to finally purchase the bonds they've been admiring," said MMA's Matt Fabian.

Municipals closed out October in the red, the third consecutive month of losses for the asset class.

October's total volume rose 29.3% to $37.156 billion in 661 issues from $28.738 billion in 614 issues a year earlier. New-money grew more than 30% while refundings were up by nearly 75%.

This could be the first time the bond market has posted three consecutive negative total return years, according to John Hancock Investment Management Co-Chief Investment Strategist Matt Miskin.

If Treasury rates become "more stabilized," it provides "a good reason to be somewhat constructive on munis for a while," BofA Global Research said in a report.

With nearly two years of volatility, The Bond Buyer wants to know your expectations for the year to come, from interest rates and bond volume to ESG and technology.

"That is not how you drive policy and it's certainly not how you drive policy when the impact of policy happens with a lag," Mohamed El-Erian said. "This is the first Fed I know that has not gotten it."

"Regardless of the decision made at our next meeting, if the economy evolves as anticipated, in my view, we are likely near or at a holding point on the funds rate," Federal Reserve Bank of Cleveland President Loretta Mester said.

"I believe we can wait, watch and see how the economy evolves before making definitive moves on the path of the policy rate," Federal Reserve Governor Christopher Waller said.

"Financial markets are tightening up and they are going to do some of the work for us," Federal Reserve Gov. Christopher Waller said in a conversation moderated by Paul Ryan.

The Federal Reserve is expected to pause at its September meeting. Jeff Timlin, a managing partner at Sage Advisory, will join us on Sept. 21 to provide analysis of the meeting.

Daly said the neutral interest rate — also known as R-star — may be higher now than it was before the pandemic

Despite recent improvements, "inflation remains well above the FOMC's 2% target. Domestic spending has continued at a strong pace, and the labor market remains tight," Bowman said Wednesday.

"If we continue to see a cooling labor market and inflation heading back to our target, we can hold interest rates steady and let the effects of policy continue to work," Daly said.

September's total volume ticked up 1.2% to $27.585 billion in 531 issues from $27.251 billion in 592 issues a year earlier. However, the month's total is lower than the $30.652 billion 10-year average, according to Refinitiv data.

As was expected, the FOMC held rates in a range between 5.25% and 5.50%, but the dot plot in the Summary of Economic Projections showed 12 of 19 members expect another 25-basis-point rate hike this year.

Fund flows "should be moving along a more positive trajectory, but they have yet to do so with munis unable to break free of the Treasury market's tight grip," Oppenheimer's Jeff Lipton said.

With a light new-issue calendar ahead of the FOMC meeting, "secondary flows may benefit from greater attention," said Kim Olsan, senior vice president at FHN Financial.

With the Federal Open Market Committee expected to skip an interest rate hike, all eyes turn to the Summary of Economic Projections and Chair Powell's remarks.

"Although inflation has moved down from its peak — a welcome development — it remains too high," Powell said in the text of a speech Friday at the U.S. central bank's annual conference in Jackson Hole, Wyoming.