Treasury yields increased last week with 10-year and 30-year Treasury yields moving 8 and 6 bp higher, respectively. Municipal yields followed Treasury yields higher as municipal yields rose across the curve. Municipal bond funds experienced inflows for the second consecutive week as funds recorded $615 million in inflows last week. As expected, the Fed kept the fed funds rate unchanged last week at the April FOMC meeting. The April meeting was likely Jerome Powell’s last FOMC meeting as Fed Chair. Powell’s term ends in mid-May. Kevin Warsh will succeed Powell as chair. While the Fed voted to keep rates unchanged, the meeting was noteworthy as three FOMC members objected to foreshadowing that the next interest rate movement would be a rate cut. Concerns about persistent inflation remain at the forefront for the Fed.

Treasury yields rose last week, driven by stronger-than-expected retail sales data and concerns regarding the progress of peace negotiations in the Iran conflict. Municipal yields were largely unchanged last week except for the front-end of the municipal yield curve which experienced a 10 bps increase. Municipal bond funds recorded $1 billion in inflows last week, rebounding from the previous week's outflows. The Fed will convene this week for its third FOMC meeting of 2026, where it is widely expected to leave rates unchanged. The probability of a Fed rate cut by year-end continues to fluctuate with incoming economic data and geopolitical headlines out of the Middle East. Currently, the odds of a rate cut by year-end sit at 46%, down from 61% last week. Additionally, on Sunday, Senator Thom Tillis announced he will no longer block the confirmation of Kevin Warsh as the next Fed Chair, clearing the path for Warsh to succeed Jerome Powell when Powell’s term expires in mid-May.