The Federal Open Market Committee concluded its policy meeting last week. The U.S. Treasury has taken "extraordinary measures" in response to the federal government reaching the debt ceiling. Meanwhile, trillions in spending are being debated in both chambers and the markets seem to have yawned at the prospect of higher inflation.

Economists surveyed by The Wall Street Journal expect to see slower, but still strong growth through the end of this year.

The monthly employment report has some notable takeaways for the direction of the economy.

U.S. financial markets react to the Fed talking rate increases and tapering their bond purchasing program. Municipal issuance picked up in June, and a low volume of trading has the municipal market relatively stable compared to treasury and equities markets.

The Federal Reserve is staying its course – keeping the fed funds rate near zero and continuing its asset purchases at current levels.

The stream of fairly positive economic data was disrupted by the shock of an underwhelming jobs report and a notable uptick in inflation measures. Muni markets have, nevertheless, remained steady.

First release of 2020 Census data and President Biden's proposal to increase the capital gains tax.

This week's commentary looks at the reactions to higher than expected inflation. Municipal yields have remained flat from March into April, and details about the President's 2022 budget outline.

While March was largely a difficult month for bonds, the fixed income markets have stabilized as we head into the second quarter. President Biden announces objectives for an additional large spending bill and introduces dramatic changes to federal tax law.

With the passage of The American Rescue Plan, focus now shifts to future legislative proposals and the possibility of tax increases, in part to address the growing federal deficit. Municipal bond yields have declined modestly over the past two weeks, and several legislative proposals specific to municipal bonds are being supported by local government groups.