- Articles are surfacing about the unprecedented and escalating attacks on the FED from President Trump. The attacks could backfire by hitting financial markets and the economy with higher long-term borrowing costs. We have seen for weeks that President Trump has lambasted Chair Powell for not cutting rates deeply to stimulate the economy, and as the current administration sees it, to lower the borrowing cost of America. Overall, we feel rates should come down, and most likely will, but not by 150bps in one move. The fight is setting the stage for an interesting September FOMC meeting.
- The issuance of MUNIs in September is currently at $ 12.2B, while redemptions and maturities over the next 30 days sit at $ 21B, compared to $ 22.1B a week ago. Overall, September should be a volatile month, with the FED meeting, issuance, and redemptions about even, and clients preparing for tax payments. MUNIs have undoubtedly lagged this year; however, as we have indicated before, if you are buying for the longer term, sticking with quality will likely yield a more satisfactory outcome. Yields have bumped up against the 5% for quite some time; we think they will tick down slowly as we move into the Fall.
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