Fixed income

Nearly a trillion dollars worth of state and local government assets are now being held in Local Government Investment Pools.

As Congress grinds through the budget reconciliation, fixed income market experts are eyeballing an uncontrolled national debt while dreading a heavy-handed response from the Treasury bond market.

Bond yields are shooting up for the second time in as many months. Federal Reserve Gov. Christopher Waller attributes the volatility to concerns about rising national debt levels.

Democrats on the House Ways and Means Committee announced a new bill that would restore the power of applying tariffs back to Congress amidst accusations of market manipulation and political ineptitude by the Trump administration.

Some analysts believe that the muni market will ultimately be insulated from any changes in tax status because of the benefit it already provides.

The rising costs of federal debt, an impending budget showdown, and Congressional turmoil is highlighting the complex relationship between Treasury securities and municipal bonds.

State and local governments are on strong financial footing and are investing in Treasury securities as chaotic federal moves shake out.

Economic forecasts include the possibility of higher inflation and slower growth that could stall future cuts to the federal fund rates.

Louis English joined Janney Montgomery Scott as managing director and head of municipal sales in the fixed-income division, based out of the Chicago office.

Taxable munis have returned 1.48% month to date and 0.29% year-to-date while investment-grade munis have seen 0.44% returns so far in March and 0.05% year-to-date. USTs are in the black at 1.43% so far this month but returning -1.76% year-to-date while corporate bonds are returning 1.24% in March but -0.46% year-to-date.

Triple-A scales saw yields rise 10 to 13 basis points following a second day of UST losses as muni investors await a robust new-issue calendar.

Munis saw smaller losses, outperforming a UST sell-off after the employment report came in stronger than expected, leading analysts to suggest Federal Reserve rate cuts may come later than anticipated.

Maggio joins KeyBanc from Hilltop Securities, where he was co-head of capital markets.

Mesirow's public finance group will collaborate with the firm's institutional sales and trading team to offer clients defeasance and cash-flow management for their portfolios.

"Despite the breathtaking selloff in longer rates, Barclays' macro strategists see no clear catalyst to stem the bleeding," Barclays strategists said. "Data are unlikely to weaken quickly or enough to help bonds."

There will be "choppiness in the municipal bond market through the end of the year," said Anders S. Persson, Nuveen's chief investment officer for Global Fixed Income, and Daniel J. Close, Nuveen's head of municipals.

Tracey Manzi, senior investment strategist at Raymond James, talks with Chip Barnett about the fixed income markets today and how munis and Treasuries are doing. She says the number one issue clients are asking about is inflation. (20 minutes)