Excerpt:
Municipals took a backseat as the Federal Open Market Committee announced its decision to implement a three-quarter point rate hike while U.S. Treasuries rallied into late afternoon following the news. Equities rallied.
The move, prompted partly by hotter-than-expected inflation data Friday, is the largest rate hike since 1994.
?Investors appear encouraged that the FOMC is willing to take forceful action to try and get inflation under control,” Wilmington Trust Chief Economist Luke Tilley said.
By front loading rate hikes, he said, the FOMC will have ?more optionality as the year unfolds,? and will be able to accelerate hikes if inflation persists, ?but if any cracks appear in the economic recovery they?ll have the option to slow down while still having rates below their estimate of neutral.?
Triple-A muni yields were cut a basis point or were little changed while UST yields fell up to 23 basis points on the short end.
Author(s): Christine Albano
Publication Date: 15 June 2022
Publication Site: Fidelity Fixed Income