Fixed Income Update
Fed Chair nominee Kevin Warsh appeared before the Senate Banking Committee on Tuesday for his confirmation hearing. His testimony was largely in line with expectations.
Warsh said the Fed over-communicates through the Summary of Economic Projections (SEP) and other public commentary, that the balance sheet should be smaller, and that the Fed “must take responsibility” for inflation. His characterization of the economy and monetary policy came across as broadly hawkish. He also argued the Fed should “stay in its own lane,” and that it can better insulate itself from political pressure by avoiding debates over political, economic, and social issues outside its purview.
Warsh offered few clues about how he would conduct policy, telling Senator Chris Van Hollen that he does not believe in forward guidance. He said the Fed has made mistakes both by committing to a rate path in advance and by abandoning forecasting discipline.
Still, he expressed support for policy easing before he was nominated, and it is no secret that the President chose someone he expects will cut rates. The President called rate cuts a “litmus test” in December and said this week that he would be disappointed if Warsh did not cut rates immediately. Warsh dismissed concerns that he would be unduly influenced by the President, even after Senator Elizabeth Warren called him a “sock puppet.”
Even so, by most accounts Warsh has convinced enough senators to approve his nomination once the Department of Justice (DOJ) investigation is dropped - reportedly the last holdup for swing vote Senator Thom Tillis.
On that note, news crossed the wire in mid-Friday-morning trading that the DOJ had decided to drop its investigation into Fed construction costs. U.S. Attorney Jeanine Pirro said she directed her office to close the investigation, as the Fed’s inspector general will undertake an inquiry into cost overruns related to the Fed’s campus renovation project.
This development clears the way for the Senate Banking Committee to send Warsh to a full Senate vote before Powell’s term as Chair ends in mid-May. If confirmed, Warsh would replace Stephen Miran as a member of the Board of Governors and would assume the chair role when Powell’s term ends.
Questions remain, however. Even after becoming Chair, it is unclear how much influence Warsh will have over the Federal Open Market Committee (FOMC). Previous Chairs - including Powell, Yellen, Bernanke, and Greenspan - were consensus builders; it remains to be seen how Warsh would persuade the Committee to follow his lead at a time when the Fed’s dual mandate is subject to competing pressures. In addition, Powell can remain a Governor until January 2028. If he does, he would likely retain an outsized influence on policy.
For the week, Treasury yields were higher by 3 to 7 basis points.
As of April 24, 2026
|
Index |
Current |
Last Week |
Wk Chg |
Last Year |
Yr Chg |
|
Tax-exempt MMF |
2.37% |
2.37% |
.00% |
3.66% |
-1.29% |
|
Taxable MMF |
3.65% |
3.65% |
.00% |
4.30% |
-.65% |
|
|
|
|
|
|
|
|
2-Year Treasury |
3.78% |
3.71% |
.07% |
3.80% |
-.02% |
|
5-Year Treasury |
3.92% |
3.85% |
.07% |
3.94% |
-.02% |
|
10-Year Treasury |
4.30% |
4.25% |
.05% |
4.32% |
-.01% |
|
30-Year Treasury |
4.91% |
4.89% |
.03% |
4.78% |
.14% |
|
5-Year Exp. Inflation |
2.59% |
2.62% |
-.03% |
2.36% |
.22% |
|
|
|
|
|
|
|
|
2-Year Municipal** |
2.52% |
2.45% |
.07% |
3.18% |
-.66% |
|
5-Year Municipal** |
2.61% |
2.63% |
-.03% |
3.36% |
-.75% |
|
10-Year Municipal** |
3.00% |
3.06% |
-.05% |
3.70% |
-.70% |
|
30-Year Municipal** |
4.37% |
4.42% |
-.05% |
4.81% |
-.44% |
|
|
|
|
|
|
|
|
Fed Funds |
3.75% |
3.75% |
.00% |
4.50% |
-.75% |
|
Prime Rate |
6.75% |
6.75% |
.00% |
7.50% |
-.75% |
|
Dollar*** |
$98.56 |
$98.10 |
$0.46 |
$99.38 |
-$0.82 |
|
CRB |
$381.84 |
$362.78 |
$19.06 |
$297.83 |
$84.01 |
|
Gold |
$4,706.70 |
$4,857.60 |
-$150.90 |
$3,332.00 |
$1,374.70 |
|
Crude Oil |
$94.01 |
$83.85 |
$10.16 |
$62.79 |
$31.22 |
|
Unleaded Gasoline**** |
$3.44 |
$3.00 |
$0.43 |
$2.00 |
$1.44 |
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
Investors balanced some renewed US-Iran geopolitical tensions with a still solid US macro backdrop and strong start to first quarter (Q1) earnings season this week. While major US indices took a breather from their remarkable April rally for much of the week, the uptrend from March’s 2026 lows remains intact. While US equities appear to have largely priced in an eventual path towards a US-Iran peace deal, a solid US macro backdrop and strong US earnings growth could remain tailwinds for the US market.
Geopolitical headlines leaned negative coming out of the weekend. Reports of Iranian attacks on vessels transiting the Strait of Hormuz, coupled with renewed threats of US strikes against Iranian infrastructure and uncertainties surrounding a second round of US-Iran talks, weighed on market sentiment early in the week. With the ceasefire deadline looming, President Trump ultimately extended the US-Iran ceasefire, giving a fractured Iranian government additional time to present a “unified proposal.” While it appears the US market has largely priced in an eventual peace agreement, a re-escalation of the conflict remains a risk and a relative halt in commercial maritime traffic through the Strait of Hormuz a consideration. West Texas Intermediate Crude moved back above $90/barrel this week, trading above $94/barrel as of Friday morning. While US equities seemed unfazed by the move higher in oil this week, it remains an important input for economic growth to monitor.
Despite this week’s modest pause, the move higher for US equities since March 30th has been robust to say the least. Through Thursday’s close, the Nasdaq Composite has jumped 17.5% over that period with the small-cap Russell 2000 up over 15% and the S&P 500 higher by more than 12%. Performance leadership has been driven by shares of technology names. Semiconductor names have been a standout, with the iShares Semiconductor ETF (SOXX) surging higher by more than 42% since March 30th, supported by renewed optimism behind the AI trade and positive AI developments. The SOXX ETF was poised to closed higher for the 18th consecutive session on Friday.
While performance has been strong for US equities in recent weeks, the market has shown some narrowness amid the current rally. The equal weight S&P 500 is lagging the cap weighted S&P 500 by more than 450 basis points since March 30th.
The US macro backdrop remains supportive of US equities with retail sales and both manufacturing and services PMIs ahead of expectations this week. Q1 earnings growth trends have further supported equities with the S&P 500’s Q1 blended earnings growth rate now at 15.1%. Looking ahead, market attention turns to the Federal Open Market Committee’s April meeting and a big week for Q1 earnings next week. Regarding the former, the Federal Reserve is expected to hold the federal funds rate steady. On the latter, five Magnificent Seven names are set to report quarterly results. Company commentary regarding AI demand, monetization, and capex could sway the market and provide a catalyst for US stocks.
As of April 23, 2026
|
Index |
Current Week |
Month of Apr. |
YTD |
|
Dow Jones Industrial Avg. |
-0.26% |
6.48% |
3.08% |
|
S&P 500 |
-0.24% |
8.94% |
4.22% |
|
Nasdaq |
-0.12% |
13.21% |
5.33% |
|
MSCI EAFE |
-2.29% |
7.30% |
6.11% |
|
Russell Mid Cap |
-0.32% |
6.79% |
8.17% |
|
Russell 2000 |
-0.06% |
11.20% |
12.19% |
