Fixed Income Update
As expected, the Fed held rates steady at 3.50% to 3.75% for a third consecutive meeting this week. The decision passed by an 8–4 vote, marking the first time since October 1992 that four or more members dissented. Governor Miran dissented in favor of a 25 basis point rate cut, while Hammack, Kashkari, and Logan opposed including an easing bias in the policy statement.
The statement ultimately retained that easing bias, though not without pushback. It noted that, “in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” While somewhat opaque, most Fed watchers interpret “additional adjustments” as a signal that policymakers still see the next move as more likely to be a cut.
There may also be some forward-looking signaling embedded in this language. With Kevin Warsh expected to take over as Chair, the Committee could be reinforcing that policy decisions will not be automatic. Debate, and potentially more frequent dissents, may become a feature if leadership pushes for a faster pace of easing. Somewhat counterintuitively, that dynamic could work in Warsh’s favor. He has historically taken a more hawkish stance on inflation, at one point calling it “a choice,” and has emphasized the importance of maintaining Fed credibility through price stability.
Chair Powell also announced that he will continue serving on the Board of Governors after his term as Chair ends on May 15. Meanwhile, Warsh cleared the Senate Banking Committee this week by a 13–11 vote and is expected to be confirmed by the full Senate in time for the June meeting.
Despite the headline, the three dissents from Kashkari, Hammack, and Logan are not as hawkish as they might appear. There was already some question heading into the meeting about whether the easing bias would be removed altogether. Their opposition likely reflects a preference for more balanced, two-sided guidance rather than a shift toward tightening. Importantly, they are not dissenting in favor of a rate hike, at least not at this stage. As Chair Powell noted, nine of the twelve FOMC voters still support maintaining an easing bias, and Warsh is expected to keep that balance intact. In that context, the 8–4 vote suggests that his arrival in June may not immediately shift the Committee’s direction.
Outside the U.S., the bond market is pricing in a meaningful amount of tightening from both the ECB and the BoE, even after both held rates steady on Thursday. ECB President Christine Lagarde indicated that policymakers held off on hiking due to limited visibility into the economic impact of the war. However, reports suggest the ECB is preparing to raise rates at its June meeting unless there are meaningful improvements in energy prices or geopolitical conditions. Current market pricing reflects roughly three ECB hikes by the end of 2026, along with two to three increases from the BoE.
Bond yields moved a touch higher this week driven primarily by another increase in energy prices.
As of May 01, 2026
|
Index |
Current |
Last Week |
Wk Chg |
Last Year |
Yr Chg |
|
Tax-exempt MMF |
2.37% |
2.37% |
.00% |
3.16% |
-.79% |
|
Taxable MMF |
3.65% |
3.65% |
.00% |
4.31% |
-.66% |
|
|
|
|
|
|
|
|
2-Year Treasury |
3.88% |
3.78% |
.10% |
3.70% |
.18% |
|
5-Year Treasury |
4.02% |
3.92% |
.10% |
3.81% |
.21% |
|
10-Year Treasury |
4.38% |
4.30% |
.08% |
4.22% |
.16% |
|
30-Year Treasury |
4.97% |
4.91% |
.06% |
4.73% |
.25% |
|
5-Year Exp. Inflation |
2.70% |
2.60% |
.10% |
2.31% |
.39% |
|
|
|
|
|
|
|
|
2-Year Municipal** |
2.64% |
2.51% |
.13% |
3.00% |
-.36% |
|
5-Year Municipal** |
2.69% |
2.60% |
.09% |
3.13% |
-.44% |
|
10-Year Municipal** |
3.09% |
3.03% |
.06% |
3.48% |
-.40% |
|
30-Year Municipal** |
4.49% |
4.38% |
.11% |
4.62% |
-.13% |
|
|
|
|
|
|
|
|
Fed Funds |
3.75% |
3.75% |
.00% |
4.50% |
-.75% |
|
Prime Rate |
6.75% |
6.75% |
.00% |
7.50% |
-.75% |
|
Dollar*** |
$98.06 |
$98.53 |
-$0.47 |
$100.25 |
-$2.19 |
|
Gold |
$4,653.90 |
$4,722.30 |
-$68.40 |
$3,222.20 |
$1,431.70 |
|
Crude Oil |
$101.65 |
$94.40 |
$7.25 |
$59.24 |
$42.41 |
|
Unleaded Gasoline**** |
$3.58 |
$3.33 |
$0.26 |
$1.94 |
$1.65 |
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
As investors weighed strong earnings momentum against the unresolved US-Iran conflict, major US equity indices oscillated between losses and gains this week. Despite West Texas Intermediate (WTI) crude moving back above $100/barrel, several US indices reached new all-time highs. US indices posted strong April performance numbers with the Nasdaq Composite leading the way, rising an astounding 15.3% in the month.
Following another breakdown in US-Iran talks and US preparations to extend its Strait of Hormuz blockade, the price of WTI pushed above $110/barrel at one point this week. US equities continued to largely ignore the move higher in energy prices amid a stall in diplomacy progress. US equities largely looked past the move higher in oil, signaling the market’s confidence the conflict was still moving down the de-escalation path despite still volatile headlines. However, the increasingly prolonged disruption to Middle East energy exports could exacerbate the inflation and economic growth backdrops.
The Federal Open Market Committee (FOMC) concluded its April meeting by holding the fed funds rate unchanged at 3.50%-3.75%, which was in line with expectations. Key takeaways included Federal Reserve (Fed) Chair Jerome Powell’s announcement that he plans to remain a Fed governor, for an indefinite period, following the end of his term on May 15th. Kevin Warsh is expected to be confirmed as the new Fed Chair by May 15th. Notably, there were four dissents, the most since 1992, with three Fed officials opposing the Fed statement’s easing bias amid an uncertain economic and geopolitical backdrop. Those three Fed officials did agree with keeping the fed funds rate unchanged. The market continues to price out any 2026 Fed rate cut with the CME FedWatch Tool showing an 85% probability the fed funds rate remains at or above current levels by year-end. A still solid US macro backdrop, and inflation uncertainties continue to reinforce the Fed’s pause in rate cuts.
Information Technology stocks stumbled early in the week following a report that indicated OpenAI failed to meet multiple internal estimates, including revenue. This report raised concerns regarding the AI name’s ability to potentially cover future compute commitments. Despite this, the Information Technology sector still posted a robust 17.5% gain in April, driven by ongoing AI infrastructure demand. Semiconductors led the rally, with the iShares Semiconductors ETF (SOXX) higher by more than 40% in the month.
First quarter (Q1) earnings season has started strongly, with S&P 500 blended earnings growth exceeding 15%. Strong quarterly results from the likes of Alphabet and Caterpillar helped to flip early week risk-off sentiment, though performance among the mega cap names reporting this week was mixed. Alphabet shares surged ~10% post-quarterly results on strong Google Cloud momentum, while Meta Platforms shares declined 8.7% in part on higher capex guidance and a softer Q2 outlook. AI capex levels and uneven monetization prospects could drive further performance dispersion amongst the mega cap names in the coming quarters. Alphabet and Amazon emerged as the mega cap standouts in April, with shares gaining 33.8% and 27.3% respectively.
As of April 30, 2026
|
Index |
Current Week |
Month of Apr. |
YTD |
|
Dow Jones Industrial Avg. |
0.86% |
7.24% |
3.81% |
|
S&P 500 |
0.62% |
10.49% |
5.70% |
|
Nasdaq |
0.23% |
15.31% |
7.29% |
|
MSCI EAFE |
0.66% |
7.56% |
6.36% |
|
Russell Mid Cap |
0.57% |
7.33% |
8.72% |
|
Russell 2000 |
0.47% |
12.21% |
13.21% |
