Treasury yields decreased last week, as the 10-year and 30-year yield both fell 4 bps. Municipal yields were largely unchanged across the curve. Consumer confidence fell another 6.8 points in November, sliding to its lowest level since April. The Expectations Index has now spent ten straight months below 80, the level historically associated with an elevated risk of recession. Open-ended responses continued to highlight concerns about inflation, prices, tariffs, and politics, with more frequent mentions of the federal government shutdown. Despite this backdrop, inflation expectations held steady in November, one of the few mildly reassuring signals in an otherwise downbeat report. Combined with a growing deficit of job openings represented by the differential of “jobs plentiful minus jobs hard to get,” rate cut probabilities increased with the current probability of the Federal Reserve cutting rates in December rising over 80%. In addition to likely Fed action in December, market participants will be digesting the news of the next Fed chair, which is expected to be announced in the coming weeks. National Economic Council Director Kevin Hassett is the heavy favorite to replace Jerome Powell.

Treasury yields decreased last week, as the 10-year and 30-year yield fell 8 bps and 3 bps, respectively. Municipal yields were largely unchanged across the curve, though the 30-year yield increased by 2 bps. Municipal bond funds experienced $965 million of outflows, breaking seven consecutive weeks of inflows and marking the largest outflow figure since funds saw over $3 billion pulled due to tariff pressure in April. The September jobs report, delayed from its original October 3 release, indicated the unemployment rate rose to 4.4%, a new cycle high and the highest since October 2021. Notably, July and August payrolls were revised lower with August now showing a net loss of 4k jobs, the second negative print in four months. The jobless claims report was released on Thursday and showed continuing claims rising and reaching a four-year high. Following the release of the September jobs report, rate cut probabilities increased, with the current probability of the Federal Reserve cutting rates in December rising over 70%.