- Federal Reserve officials left interest rates unchanged on 6/18/25 and continued to pencil in two rate cuts for 2025, citing high uncertainty over the economic outlook that has since diminished. Speaking to reporters following the decision, Chair Jerome Powell repeated his view that the central bank was “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
- Currently, US banks are holding the smallest amount of debt sold by states and localities in a decade as a lower tax rate has reduced the appeal of MUNIs. Banks held 487B as of March 31, compared to a record of 631B of MUNIs at the end of 2021. What does this mean? Banks do not currently see the benefit of holding MUNI paper in the current tax environment; however, this trend is likely to change, and it will most likely continue for the foreseeable future.
- If you are buying College debt, wealthy US colleges scored a win this past Monday with the release of Senate Republican’s tax bill, which would institute a lower tax increase on endowments than what the GOP House members have backed. This is a win for these types of colleges; however, it is unlikely to change any credit ratings in the near future.
- US retail sales fell for the second consecutive month in May, suggesting growing anxiety over tariffs. Consumers continue to pull back after an early-year spending rush. Should this continue, this will assist in making decisions for the FED on rates; however, as we have been saying, the FED will continue to wait for clarity on tariffs and now jobs.
- We continue to believe the FED will rely on “uncertain outlook” or “lack of clarity” language, as this will create a “pause” in rates for the near term. Holding rates at the 4.25%-4.50% range for this meeting would be the fourth straight meeting where officials kept rates unchanged.
- If you hold Chicago O’Hare and Midway paper, the City of Chicago council’s finance committee approved a bond authorization for a senior lien to refinance a large portion of those two airports. Most of the O’Hare approval would be for refinancing and potentially repurchasing older bonds through a tender offer. I suspect we will see this bond hit the market in the late summer or early fall, causing a slug of bonds to be called.
- SALT continues to be under fire, as Senators decided to put a placeholder cap of $10K in the draft bill, a drastic decrease from the $40K in the House-passed bill. This will impact many in higher-income tax states such as NY and CA and should increase the demand for MUNI paper.
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.
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