Trade tensions between the U.S. and China have led to declines in stock prices and lower bond yields. Meanwhile, yields on muni bonds have continued to decline, reaching the lowest levels since January 2018.

Taxes are in and state revenues are generally up. A question going forward will be whether states alter their tax codes to conform with the Tax Cuts and Job Act, but with political gridlock, a bipartisan deal is unclear. At the macro level, treasury yields have fallen to their lowest levels since March and all eyes are on the Fed’s meeting this week and additional economic data. So far, the data has indicated a slightly weaker than expected U.S. economy and troubling low levels of inflation. While the expectation is for the Fed to keep rates the same, markets will be looking for clues on where the Fed sees the U.S. economy headed and particularly if rates might be cut sometime this year.

Investor expectations diverge from usual pattern on Fed rate hikes. Municipal bond market is robust and investors are sold on their value. We look at potential capital budget impacts for the President’s budget proposal and an update on Treasury yields.

It is one of the most ominous terms used in economic parlance. A word that can send shivers up the spine of even the most cold-blooded Wall Street trader. This expression describes an occasion where long-term government bond yields fall below that of shorter maturities.