Treasury yields rose last week, with 10-year and 30-year yields both increasing 4 bps. The municipal yield curve steepened slightly, with the 10-year yield remaining steady week-over-week and the 30-year yield increasing by 2 bps. Municipal bond funds experienced $1.1 billion of inflows, following $1.6 billion of inflows in the prior week. Initial jobless claims dropped more than expected last week; however, the four-week moving average inched up to 227k, signaling that the underlying trend is still drifting higher. The April CPI report will be released on Tuesday. Headline inflation is expected to come in at 0.3% MoM and 2.4% YoY, with core CPI at 0.3% MoM and 2.8% YoY. As expected by market participants, the federal funds rate did not change at the May FOMC meeting. In his press conference comments, Fed Chair Jerome Powell noted the Fed is taking a “wait and see” approach, as the current economic landscape has significant ambiguity.

Treasury yields fell through the first part of last week; however, the surprisingly strong April jobs report caused a reversal in rate movement to end the week. Ultimately, Treasury yields rose week-over-week, with 10-year and 30-year yields increasing 4 bps and 5 bps, respectively. Meanwhile, municipal yields were firmer, with the 10-year yield falling 15 bps and the 30-year yield decreasing by 10 bps. Municipal bond funds experienced $1.6 billion of inflows, breaking a 7-week streak of outflows in prior weeks. It was the largest inflow into municipal bond funds since January. The jobs report indicated U.S. employers adding 177k jobs in April, slightly below March figures and consistent with the two-year average. This job growth surpassed expectations, but the impact of the tariffs may be felt in the coming months. The May FOMC meeting will occur on Wednesday– the market does not expect any change to the rate at this week’s meeting. Currently, the first rate cut in 2025 is anticipated to occur in July.