Treasury yields ended the week lower, but intraweek movement was volatile as markets digested new geopolitical headlines each day. Municipal yields experienced a significant decline following the announcement of the ceasefire with Iran, with 10-year and 30-year municipal yields falling 13 bps overall. Municipal bond funds experienced their second straight week of inflows, adding $866 million in the most recent week. Notably, funds have now seen inflows in 19 of the last 20 weeks. On the macroeconomic data front, headline CPI for March printed in line with market expectations at 0.9% month-over-month, while core CPI came in below forecasts at 0.2% month-over-month. The March headline inflation increase was largely driven by a spike in energy prices stemming from the Middle East conflict. While core inflation remained subdued in March, market participants will be watching closely to see whether the energy shock bleeds more meaningfully into core prices in April, potentially influencing Fed action.

Treasury yields fell last week, with 10-year and 30-year Treasury yields declining by 9 and 7 bps, respectively. Municipal yields followed suit, as both the 10-year and 30-year yields decreased 10 bps. Interest rate movements remain heavily headline-driven, with market participants attempting to decipher the latest developments regarding the Iran conflict and the likelihood of a resolution. Outflows from municipal bond funds proved short-lived as bond funds experienced inflows of $923 million, reversing the $599 million in outflows from the prior week. Beyond news out of the Middle East, markets will be paying close attention to the March CPI report due on Friday. Headline inflation is expected to print at 3.4% year-over-year, while core inflation is forecasted at 2.7%. A firmer headline print could challenge the near-term easing narrative, but if core remains well-contained, the Fed may be inclined to treat the move as an energy-led bump rather than the start of a broader reacceleration in inflation.