What's Happening in the Muni Bond Market?

Aug 22, 2025

Cooper Howard, Director and fixed income strategist at the Schwab Center for Financial Research, dives deep into the muni bond market. He examines why munis have lagged behind other fixed income options this year and highlights the appeal of high-yield municipal bonds. The conversation also explores the benefits of investing in individual bonds versus mutual funds or ETFs. Listeners will gain insights into the dynamics at play in the muni market, offering potential opportunities for savvy investors.

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INSIGHT

Labor Market Will Shape Fed Policy

The Fed will likely avoid a dramatic policy reveal at Jackson Hole and stick to its script.
Labor market shifts from aging and migration will shape how the Fed balances employment and inflation.

INSIGHT

Framework Change Looms At The Fed

The Fed may drop its flexible average inflation targeting framework but it hasn't chosen a clear replacement.
Shifts in framework matter because they change how the Fed trades off inflation versus employment.

INSIGHT

Tariffs Are Echoing In Inflation Data

Tariffs are showing up inside inflation data via trade services and margin pass-through.
Retailers' behavior shifts and trading down suggest tariffs and margins are affecting consumer prices.

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Liz Ann Sonders and Kathy Jones discuss the implications of the Federal Reserve's annual Jackson Hole meeting, focusing on monetary policy, labor market dynamics, housing market challenges, and the impact of tariffs on inflation. They explore how these factors influence economic indicators and the Fed's decision-making process moving forward.

Then, Cooper Howard, director and fixed income strategist at the Schwab Center for Financial Research, joins the show to discuss the state of the muni bond market and where there might be opportunities for investors. He and Kathy cover why munis have underperformed other parts of the fixed income market this year; the attractiveness of high-yield, or "junk," muni bonds; investing in individual bonds versus mutual funds or ETFs; and much more.

Finally, Kathy and Liz Ann discuss the data and economic indicators they will be watching in the coming week.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting.

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