A ceasefire announcement, stronger-than-expected payrolls, and record Q1 IG issuance headline this week’s fixed income commentary for the week of April 9, 2026.
Economic Commentary
- ISM Services Index fell from 56.1 to 54.0 in March, short of the 54.9 median estimate. The employment component dropped from 51.8 to 45.2. New orders accelerated from 58.6 to 60.6, signaling decent future growth. Prices paid surged from 63.0 to 70.7, the highest since October 2022.
- Nonfarm payrolls rose 178k in March, nearly three times the 65k consensus. February was revised down significantly, though January was revised up by a nearly offsetting amount. The three-month average rate of payroll growth was 68.3k.
- Average hourly earnings rose 0.2% after two months of 0.4% increases. Year-on-year earnings growth slowed from 4.1% to 3.5%, a new cycle low. The average workweek fell 0.3% and aggregate hours worked fell 0.2%.
- Investors remain uncertain about the ceasefire announcement, amid continuing attacks in the region and mixed messages regarding the Strait of Hormuz.
- The Fed’s March meeting minutes were largely unsurprising. Almost all FOMC participants were comfortable leaving rates on hold until the war’s economic impacts became clearer. Chair Powell’s recent remarks were more informative, underscoring the Fed’s willingness to look through any short-term inflation bump from rising energy costs.
- Personal income declined -0.1% in February and personal spending rose +0.5%, below the +0.6% estimate. January spending was revised down from +0.4% to +0.3%.
- Core PCE rose +0.4% in February, in line with estimates; headline PCE was also +0.4%.
- Initial jobless claims were 219k, up from a revised 203k the prior week.
- Q4 GDP was revised lower again to +0.5%, down from +0.7%.
Our Take
The general consensus is that the labor market is in a steady state of low hiring and low firing — sufficient given lower immigration and population trends. The broader economy appeared to be on solid footing before the war began, which has put renewed inflation back on the table. The Fed is right to wait and observe how long the conflict lasts and whether the primary risk is to inflation or the labor market. With hourly earnings and hours worked trending weaker, downside labor market risk grows the longer the conflict drags on. US Treasuries, however, appear more focused on inflation. With oil prices and rates driving overall markets and the outlook cloudier than usual, staking out aggressive duration views is particularly challenging right now.
Corporate Bond Market Commentary
Investment Grade (IG) Bonds
- IG spreads tightened 5bp to +86bp; total returns were +1.23%.
- IG new issue supply was only $8 billion, below the $10–15 billion estimate. NICs were 5bp, book coverage was 2.9x, deals tightened 29bp from IPT to final pricing, and attrition was 26%.
- March total IG supply was $237 billion — the fourth highest monthly total ever. Q1 finished at $634 billion, up 20% year-over-year and the highest Q1 on record.
- IG fund flows were -$5.35 billion.
High Yield (HY) Bonds
- HY spreads tightened 25bp to +317bp; total returns were +1.21% (BBs +1.23%, Bs +1.24%, CCCs +0.96%).
- HY new issuance was $3.1 billion, with only the Sealed Air LBO financing and Skeena Resources pricing deals.
- HY fund flows were -$2.56 billion.
Our Take
Strong returns continued into last week after a two-week ceasefire was reached Tuesday night. Whether this tenuous agreement holds and evolves into something more permanent — or collapses back into uncertainty — will drive macro sentiment. Upcoming corporate earnings may begin to reveal the damage from the conflict in terms of energy, fertilizer, helium, and transportation costs, as well as lost revenue from disrupted commerce. With spreads still relatively tight, the risk/reward may not be compelling enough to add unhedged risk aggressively.
Municipal Bond Market Commentary
- The municipal bond index returned +0.82% last week.
- Muni yields fell -5, -8, -9, and -9bps at the 1-, 5-, 10-, and 30-year maturities; ratios were unchanged at 64%, 64%, 70%, and 90% at those same tenors.
- Last week’s new issue supply was $9.1 billion ($7.6 billion tax-exempt); this week’s calendar totals $10.1 billion.
- Fund flows were +$1.513 billion, including $219 million into mutual funds and $1.294 billion into ETFs.
Our Take
Municipal bonds are finding their footing after a stretch of weak technicals and adverse seasonality. The page may be starting to turn, with brighter days ahead as seasonal tailwinds build in May, June, and July. Ratios at the 10- and 30-year maturities remain relatively elevated and warrant consideration ahead of the improving technical backdrop.
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