- Fed Officials Signal Possible September Rate Cut Amid Labor Softness: Three Fed policymakers — Daly (SF), Cook (Board), and Kashkari (Minneapolis) — expressed concern about a slowing labor market, citing weak July job gains and downward revisions to previous months. Daly noted the labor market has “softened” and said policy “will likely need to adjust” in the coming months. Markets are increasingly pricing in a September rate cut, with some officials now projecting two cuts before year-end.
- Southeastern Pennsylvania Transportation Authority – SEPTA Faces Funding Deadline to Avoid Transit Cuts: Philadelphia’s transit authority must secure new state funding by August 14 to avoid a 20% service cut, including 32 bus routes and significant train reductions. Failure to act could have a material credit and ridership impact on SEPTA bonds. If you own SEPTA bonds, we recommend monitoring their quality and insurance.
- The Texas Municipal Retirement System (TMRS) appointed Annika Kim — formerly with Apollo, Carlyle, and Goldman Sachs — as its new Director of Credit. She will oversee credit strategy and portfolio development for the $40B+ fund, which serves over 260,000 members across 940+ Texas cities. TMRS has also added senior talent to its private equity group, highlighting the fund’s continued shift toward alternative and active credit strategies. Clients should expect more sophisticated asset allocations emerging from mid-sized public pensions.
- New York City’s five major pension funds returned 10.3% in FY 2024, outperforming their 7% target and easing the city’s contribution requirements by an estimated $2.2B over the next five years. Substantial gains in equities—especially foreign developed markets and AI-driven U.S. tech—led performance, while private equity and real estate lagged. With a $295B asset base, NYC’s funds are increasing exposure to alternatives (targeting up to 32%), though recent results highlight the volatility and underperformance risks of illiquid assets. As we have been discussing, we should be careful of similar allocation shifts in other public plans.
- White House Overhauls Puerto Rico Oversight Board: The Trump administration removed 5 of 7 members of Puerto Rico’s Financial Oversight and Management Board, raising uncertainty around PREPA’s ongoing $10B debt restructuring. This move could delay creditor negotiations and LNG contract approvals, introducing short-term volatility for Puerto Rico-related municipal bonds. Watch for market reaction in Puerto Rico debt, especially PREPA bonds.
- Chicago Pension Legislation Raises Credit Concerns: S&P Global warned that newly signed legislation increasing pension benefits for Chicago police and fire may further pressure the city’s finances. While the city retains a BBB rating (stable), this follows a prior downgrade earlier this year. We have seen pension funds create stress for other cities; this is not new to Chicago, and we will need to continue monitoring.
- Stanford University Layoffs Highlight Strain in Higher Ed Sector Stanford plans to cut 363 employees starting Sept. 30, reflecting growing financial pressures across U.S. colleges amid reduced federal funding and declining international student enrollment. These stresses continue to weigh on higher education muni bonds, particularly for smaller or regional institutions. Clients should be cautious with uninsured higher-ed debt, as declining revenue and enrollment can quickly impact credit quality and liquidity.
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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