Fixed Income Weekly Primer

Latest edition · August 31, 2026

tfi weekly primer

Persistent PCE inflation keeps Fed Chair Kevin Warsh focused on price stability rather than growth, even as Treasury debt buybacks push in the opposite direction. Across fixed income, the Treasury curve flattened, investment-grade corporate bonds achieved 1-year total return highs, and steep municipal curves continue to offer attractive long-end income.

In the week ending August 31, 2026, persistent PCE inflation reinforced Fed Chair Kevin Warsh's data-dependent, no-forward-guidance stance prioritizing price stability over growth. At the same time, Treasury Secretary Scott Bessent announced a doubling of debt buybacks to lower rates, setting monetary and fiscal policy on a collision course. Consequently, the Treasury curve flattened, driven by double-digit basis point increases in 1- and 2-year yields alongside falling 10- and 30-year yields. Elsewhere, corporate investment-grade bonds set a 1-year total return high, CD offerings expanded at the front end, and a steep municipal curve maintained compelling income at longer maturities.

Key takeaways from the latest edition

• 1.Inflation persists above expectations per recent PCE data, establishing it as Fed Chair Kevin Warsh's central priority without forward guidance, while Treasury debt buybacks by Scott Bessent conflict with monetary policy goals.
• 2.The U.S. Treasury curve flattened over the week, with front-end 1- and 2-year yields rising 11-12 bps while 10- and 30-year yields fell.
• 3.Corporate investment-grade bonds reached their highest 1-year total return, while steep municipal yield curves continue to present income opportunities at the longer end.

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