Jerome Powell

Powell is set to appear on Capitol Hill this week for his semi-annual monetary policy testimony, the first time the Fed chief will answer questions from Congress in public since early March.

Even more uncertainty has been introduced into the municipal bond market as the Federal Reserve may have to tweak its monetary policy plans as the situation unfolds.

The Federal Reserve said further interest-rate hikes would be required to restore price stability.

"We think we are going to need to do further rate increases," Powell said Tuesday.

Many believe the Federal Reserve will slow down rate increases beginning in December.. Steve Friedman, senior macroeconomist at MacKay Shields, will join us the day after the meeting to discuss what was done and what he expects in the future.

"This week will likely have been the last active week of the year, but it turned out to be quite eventful," according to Barclays PLC.

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."

Munis saw the best performance in November in decades, with the asset class ending in the positive by 4.68%. The MSRB reported that trading volume reached another record in November, with 1.29 million municipal trades.

Powell said smaller interest rate increases are likely ahead — and could start as early as next month.

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.