Fed Attacks, Higher Yields, and Confidence Shifts — Is a September Cut Baked In?

August 29, 2025
By: DRL Group

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  • Articles are surfacing about the unprecedented and escalating attacks on the FED from President Trump.  The attacks could backfire by hitting financial markets and the economy with higher long-term borrowing costs. We have seen for weeks that President Trump has lambasted Chair Powell for not cutting rates deeply to stimulate the economy, and as the current administration sees it, to lower the borrowing cost of America. Overall, we feel rates should come down, and most likely will, but not by 150bps in one move.  The fight is setting the stage for an interesting September FOMC meeting. 
  • The issuance of MUNIs in September is currently at $ 12.2B, while redemptions and maturities over the next 30 days sit at $ 21B, compared to $ 22.1B a week ago.  Overall, September should be a volatile month, with the FED meeting, issuance, and redemptions about even, and clients preparing for tax payments.  MUNIs have undoubtedly lagged this year; however, as we have indicated before, if you are buying for the longer term, sticking with quality will likely yield a more satisfactory outcome. Yields have bumped up against the 5% for quite some time; we think they will tick down slowly as we move into the Fall. 
  • On August 26, during the webinar, we discussed Distressed credits, including those in higher education. There are several reasons why we are covering this topic, probably the most visible or telegraphed is Harvard University.  President Trump indicated he wants “nothing less” than 500MM from the University. Trump underlined his financial goal in comments to Education Secretary Linda McMahon at a cabinet meeting on Tuesday of this week. This has been a well-publicized battle, and other universities may find themselves in a similar situation. We would caution you if you are a buyer of this type of credit.  Overall, the bonds are most likely to be okay; however, you can expect to see a lot of news related to this type of structure over the next few months. 
  • US consumer confidence fell slightly in August as Americans expressed greater concerns about their prospects for finding a job.  We are seeing the job market weaken, and it will likely continue to do so as we move into the Fall.  Being one of the primary gauges for the FED, this will add fuel to the thought of rate cuts in September.  We do, however, still have several economic data points that will be released prior to that meeting. 
  • As we discussed on the webinar, one of the key reasons MUNIs have lagged this year is supply.  Supply starts the week at 11.7B, although below the average of 15B, it is still heavy compared to 2024 where the average was around 10B.  We suspect this will slow down over the next couple of months, however higher yields remain in place which could make for terrific entry points for the longer-term investor. 

Securities offered through NewEdge Securities, LLC, member FINRA and SIPC. The DRL Group is not a subsidiary or control affiliate of NewEdge Securities, LLC. NewEdge Securities, LLC. has no affiliation to BondDesk Trading LLC or BondTrader Pro, or Tradeweb Direct, Bondpoint, TMC, Market Axess or any ECN.

Yield to call (YTC) is not indicative of total return; this yield is valid only if the security is called. Bonds may or may not be called, or be callable on multiple dates or, in other cases, called any date following the first call date, so yield to call is based on the earliest stated call date. Discounted bonds may be subject to capital gains tax. Bonds may be subject to OID (Original Issue Discount). Prices and availability may change at anytime without notice.

Do not buy bonds based on the Yield to Call (YTC). Insured bonds are issued for timely payment of principal and interest only. Insured bonds do not cover potential market loss and are subject to the claims paying ability of the insurance company.

Non-rated (NR), With-Drawn (WR), or below investment grade bonds, lower rated bonds, carry a greater potential risk of default & should be considered by sophisticated investors only.

This document is for informational purposes only and does not replace or serve as a substitute for your official monthly statement generated by NFS. Please refer to your official statement for accurate and comprehensive account details.

Bonds may be subject to capital gains tax. This summary is for informational purposes only and is not an offer or solicitation for the purchase or sale of any security or a recommendation or endorsement of any security or issuer. NewEdge Securities, LLC. and DRL Group make no representation about the accuracy, completeness, or timeliness of this information. Bonds could also be subject to the DeMinimis Rule, please consult with your tax advisor for further clarification.

Call us at 281-398-8600 to invest in these or any of our other offerings today.

By: DRL Group

Sign up now to receive the free Muni Market Insider – Your Ultimate Guide to Tax-Free Investing!

Q

Subscribe to receive the weekly Muni Market Insider – Your Ultimate Guide to Tax-Free Investing!

Stay Ahead of the Curve with analysis on:

  • Top-rated municipal bonds with strong credit ratings
  • Tax-advantaged opportunities to maximize your returns
  • Market trends & economic shifts impacting local governments
  • Exclusive interviews with leading muni bond strategists

"*" indicates required fields

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Have a topic you'd like to read more about? Have a question for us? Please let us know what's on your mind.
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By submitting this form, you are consenting to receive marketing emails from: The DRL Group, 605 B Park Grove Drive, Katy, TX, 77450, US, https://www.drlgroup.net. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.

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