FOMC

For municipals, Wednesday "marks a crucial step forward, perfectly aligned with the current risk landscape," said James Pruskowski, chief investment officer for 16Rock Asset Management.

Given the Fed's reluctance to "surprise markets or take actions that could be perceived as overtly political," Interactive Brokers Chief Strategist Steve Sosnick said, "we find it hard to believe that anything other than 25 bp is the likely outcome for the upcoming FOMC meeting."

While supply falls next week as investors await their first Fed rate cut in four years, it should pick up after the FOMC, Barclays PLC said, adding the 30-day visible pipeline "is at relatively manageable levels at the moment." Bond Buyer 30-day visible supply is at $10.09 billion.

The August consumer price index showed inflation remains above the Federal Reserve's target level and makes a 50-basis-point rate cut next week unlikely, economists said. Further, many expect the market will be disappointed going forward, as future cuts will likely be shallower than expected.

"The numbers are weak, but not cusp of recession weak," Chris Low, chief economist at FHN Financial, said.

All eyes are on Jackson Hole and Fed Chairman Jerome Powell's speech this week, noted Cooper Howard, a fixed-income strategist at Charles Schwab.

"Fed watchers will be parsing Powell's comments for signs that a 50bp rate cut is on the table for September," noted Lauren Saidel-Baker, an economist with ITR Economics. "However, the notoriously tight-lipped chair is unlikely to confirm this, making a 25bp cut the most likely outcome."

Gary Quinzel, vice president of portfolio consulting at Wealth Enhancement Group, gives his views about monetary policy and offers his opinion on the FOMC statement and Fed Chair Jerome Powell's press conference.

"The Fed remains data dependent as always, but it now appears that the 'more good data' bar is not as high as it was before, particularly with labor market developments becoming more important," said Michael Gregory, deputy chief economist at BMO Economics.

Economists expect the FOMC to hold rates, although some say there's a case to be made for a July cut, with Fed Chair Powell setting the table for September.