Washington

Analysts are unsure what the Federal Open Market Committee will do with monetary policy in 2025. The panel projects two rate cuts, but some analysts expect more, and others see fewer.

The Trump administration will bring a shift in infrastructure priorities.

Munis "continued their slide" last week as yields rose an average of 23 basis points across the curve as the Fed Chairman Jerome Powell signaled the Fed will take a "more cautious approach" on interest rate cuts next year, said Jason Wong, vice president of municipals at AmeriVet Securities.

The finally approved continuing resolution steers around the debate to raise the debt ceiling while funding repairs to the toll-supported Key Bridge in Baltimore, reimbursing DC for inauguration costs and transferring the RFK stadium site.

Bond issuers are establishing common reserve funds to spur economic growth while also generating income, but risk is involved.

"Munis are grappling with a storm of uncertainty," said James Pruskowski, chief investment officer at 16Rock Asset Management.

A bipartisan agreement on a continuing resolution to keep the government open fell apart after intervention from President-elect Trump and Elon Musk, raising concerns about federal funds flowing to states, local governments, and infrastructure projects.

It's hard enough convincing local governments to spend money on cyber insurance that covers ransomware attacks, said Omid Rahmani, public finance cybersecurity lead at Fitch Ratings. The new and very specific threat of a hacked financing process, is "absolutely" underappreciated by the public finance industry.

As the market prepares for 2025, there's a lot of uncertainty around what the new administration will mean for the macroeconomic environment and interest rates, the latter of which may be impacted by policy around the deficit, said Steve Shutz, portfolio manager and director of tax-exempt fixed income at Brown Advisory.

A continuing resolution that included federal funding for the repair of the Key Bridge in Baltimore and transferring the RFK stadium site to the city of Washington collapsed under pressure.