Fixed Income Update
After trading sideways for much of the week, bond prices moved higher on Friday, pushing yields down to their lowest levels in nearly a month. The move was driven by easing tensions in the Middle East, which pulled oil prices lower and helped shift market expectations toward roughly even odds of a Fed rate cut later this year.
Five-year Treasury yields fell nearly 10 basis points on Friday as signs of a potential resolution began to take shape. Iran’s Foreign Minister indicated that the Strait of Hormuz is now “completely open,” allowing global energy supplies to move freely during a 10-day ceasefire between Israel and Hezbollah in Lebanon. That said, yields retraced some of their decline after President Trump stated that the US would maintain its blockade for now.
Shorter-term rates followed suit. Two-year Treasury yields fell below the Fed Funds upper bound of 3.75% and reached their lowest level since March 18.
While this is a step in the right direction, the bond market remains cautious. Inflation continues to show signs of stickiness, and economic data has generally held up better than expected. That combination could keep the Fed on hold longer than markets had previously anticipated, which may limit how far yields can fall even as geopolitical risks ease.
The Fed enters its pre-meeting blackout period at the end of today, but officials had an opportunity this week to share their views ahead of that deadline. New York Fed President John Williams said he expects inflation to move back toward 2% next year, though he avoided offering firm guidance given the uncertain economic impact of the conflict. Governor Stephen Miran took a different stance, indicating support for three or four rate cuts this year and noting that the war has not altered his inflation outlook. Miran has generally been an outlier during his time at the Fed and is expected to be replaced once the Senate approves Kevin Warsh as the next Fed Chair.
Warsh’s confirmation hearing before the Senate Banking Committee was delayed until next week. Senator Thom Tillis has said he will block any nominee until the Department of Justice concludes its investigation into Chair Powell. Powell, for his part, has indicated he will continue to serve as Chair on an interim basis if no successor is confirmed.
The situation remains fluid as the Department of Justice has shown no signs of backing down, and President Trump reiterated this week that he would attempt to remove Powell if he does not step aside. While we do not believe the President has the authority to remove the Fed Chair absent misconduct, there may be alternative paths, including appointing a current Fed governor such as Stephen Miran or Chris Waller. Even in that scenario, Senate approval would still be required.
It is a complex and somewhat uncertain backdrop. We remain hopeful that the investigation concludes in a timely manner and that a new Chair can be confirmed without prolonged disruption, allowing the Fed to refocus on independent policy decisions.
As of April 17, 2026
|
Index |
Current |
Last Week |
Wk Chg |
Last Year |
Yr Chg |
|
Tax-exempt MMF |
3.24% |
2.92% |
.32% |
3.84% |
-.60% |
|
Taxable MMF |
3.68% |
3.65% |
.03% |
4.31% |
-.63% |
|
|
|
|
|
|
|
|
2-Year Treasury |
3.70% |
3.80% |
-.09% |
3.80% |
-.10% |
|
5-Year Treasury |
3.84% |
3.94% |
-.11% |
3.94% |
-.10% |
|
10-Year Treasury |
4.24% |
4.32% |
-.07% |
4.33% |
-.08% |
|
30-Year Treasury |
4.88% |
4.91% |
-.03% |
4.80% |
.08% |
|
5-Year Exp. Inflation |
2.62% |
2.66% |
-.04% |
2.41% |
.20% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2-Year Municipal** |
2.45% |
2.41% |
.03% |
3.18% |
-.74% |
|
5-Year Municipal** |
2.63% |
2.61% |
.02% |
3.34% |
-.71% |
|
10-Year Municipal** |
3.09% |
3.06% |
.03% |
3.66% |
-.58% |
|
30-Year Municipal** |
4.46% |
4.42% |
.04% |
4.74% |
-.28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fed Funds |
3.75% |
3.75% |
.00% |
4.50% |
-.75% |
|
Prime Rate |
6.75% |
6.75% |
.00% |
7.50% |
-.75% |
|
Dollar*** |
$97.98 |
$98.65 |
-$0.67 |
$99.38 |
-$1.39 |
|
CRB |
$374.61 |
$369.30 |
$5.31 |
$296.38 |
$78.23 |
|
Gold |
$4,866.60 |
$4,761.90 |
$104.70 |
$3,308.70 |
$1,557.90 |
|
Crude Oil |
$83.50 |
$96.57 |
-$13.07 |
$64.68 |
$18.82 |
|
Unleaded Gasoline**** |
$2.99 |
$3.04 |
-$0.05 |
$2.01 |
$0.98 |
Note: Municipal yields are as of the previous business day.
* Composite A
** General Obligation AA+
*** Int'l value of the U.S. dollar (Avg. exchange rate between the dollar and 6 major world currencies).
**** Futures price per gallon
Stock Market Update
US equities fully erased Iran-war related losses with major US indices all in positive territory year-to-date. Improving confidence in the durability of the US-Iran ceasefire, and optimism regarding the potential for a peace deal, supported risk appetite and pushed both the S&P 500 and Nasdaq to new all-time highs.
Despite the continued absence of a formal peace agreement, investors grew increasingly optimistic the US-Iran ceasefire would hold, and the conflict was headed in the direction of a resolution. While the early week US blockade of the Strait of Hormuz briefly lifted concerns of a possible conflict re-escalation, headlines ultimately leaned constructive throughout much of the week. President Trump added to market hopes of a peace deal when he stated that the war is “very close to over.” Sentiment improved further after Iran announced the Strait of Hormuz would be open for the duration of the ceasefire. Risk assets responded positively, while both WTI crude and the 10-year US Treasury yield moved lower on the week. While the conflict remains unresolved, equity markets appear to be pricing in a credible path towards further de-escalation.
Improved market sentiment prompted systematic strategy buying with funds shifting from risk-off to risk-on. Systematic flows were noted as being a tailwind for this week’s rally. The S&P 500 has advanced in 11 of its last 12 sessions and was well positioned for another positive finish on Friday. The Information Technology, Communication Services, and Consumer Discretionary sectors have been performance leaders within the current rally, up more than 13%, 13%, and 10% respectively in April. After underperforming the broader market in the first quarter (Q1), several mega-cap technology names have rebounded sharply in April given improved valuations and positive AI developments. Amazon, Meta Platforms, and Alphabet are each higher by more than 18% month-to-date.
The market rebound extended beyond just mega-cap technology names, with software and private credit exposed equities also reversing from Q1 weakness this week. Software names, hard hit by AI disruption fears throughout Q1, rallied sharply with valuations and positioning supportive. The iShares Expanded Tech-Software Sector ETF (IGV) was up nearly 13% week-to-date through Thursday’s close. Private credit names also participated, as risk-on sentiment and improved headlines lifted share prices for names such as Blackstone, which was higher by 11.6% week-to-date through Thursday’s close.
Beyond geopolitical de-escalation, a resilient US macro backdrop and early earnings strength have also been supportive of the rally in equities. Large US banks reported Q1 results this week, providing largely constructive commentary on both the macro and consumer fronts. Per FactSet, the S&P 500’s Q1 blended earnings growth stood at 13.2% early in the reporting season, which will accelerate next week with 93 S&P 500 companies set to report. While inflation and economic growth remain key focal points for investors, the ultimate economic impact of the Iran war on the US economy remains uncertain.
As of April 16, 2026
|
Index |
Current Week |
Month of Apr. |
YTD |
|
Dow Jones Industrial Avg. |
1.38% |
4.88% |
1.53% |
|
S&P 500 |
3.30% |
7.91% |
3.23% |
|
Nasdaq |
5.24% |
11.65% |
3.88% |
|
MSCI EAFE |
1.07% |
8.60% |
7.39% |
|
Russell Mid Cap |
2.09% |
5.63% |
7.00% |
|
Russell 2000 |
3.39% |
8.97% |
9.94% |
