Skip to main content
Add funds
Fund 1
Fund 2
Fund 3
Fund 4
The Morningstar Fund Compare tool quickly evaluates different funds against one another. In addition to Nuveen funds, add any MF, CEF or ETF available from Morningstar. Important information and disclosures are included after you click Generate Report. Please ensure to enable pop-ups in your browser.
The Morningstar Portfolio Review tool compares and analyzes your portfolio holdings. In addition to Nuveen funds, add any MF, CEF or ETF available from Morningstar. Important information and disclosures are included after you click Generate Report. Please ensure to enable pop-ups in your browser.
utility-drawer__mobile-restriction Tools are currently unavailable for use on mobile. Please visit the desktop site.
fund compare tool image
Fund Compare
Quickly evaluate different MFs, CEFs and ETFs against one another
portfolio review tool image
Portfolio Review
Generate a detailed analysis of your portfolio holdings including MFs, CEFs and ETFs
Image of Municipal bond investing ladder tool
Municipal Bond Ladder Tool
Learn how a laddered portfolio may perform in rising rate environments
Powered by Morning star
Confirm your location and role
location select
language select
Weekly Fixed Income Commentary

Hawkish Fed rhetoric boosts Treasury yields

Anders S. Persson
Chief Investment Officer, Head of Nuveen Global Fixed Income
Daniel J. Close
Head of Municipals
stairs with green rail

Weekly fixed income update highlights

U.S. Treasury yields rose after hawkish comments from U.S. Federal Reserve officials. The Dallas Fed President signaled support for additional rate hikes as soon as June, while most other officials support a pause. Chair Powell declined to repeat this hawkish language, but pushed back against market pricing for rate cuts later this year.

[Like what you’re reading? Sign up here for Nuveen’s weekly market insights to receive content like this delivered to your inbox every Monday morning.]


  • U.S. Treasury yields rose significantly.
  • Spread assets gained relative to Treasuries.
  • Increased seasonal supply should provide an attractive entry point for municipal bonds.

Investment views

“Higher for longer” remains as a theme, as the Fed battles to control inflation. Higher interest rates are likely to cause additional volatility.

The underlying growth outlook remains healthy, thanks to strong consumer balance sheets and solid levels of businesses investment. This combination should keep corporate defaults low.

Treasury yields are likely to fall slightly this year, and we expect the 10-year Treasury yield to end 2023 around 3.25%.

We favor selectively taking on risk in this environment of attractive prices and yields. Credit selection is key as we search for bonds with favorable income and solid fundamentals.

Key risks

  • Inflation fails to moderate as expected, weighing on asset prices.
  • Policymakers tighten too rapidly, undermining the global economic expansion.
  • Geopolitical flare-ups: China, Russia, Turkey, Iran.

Investment grade corporates see highest inflows in six weeks

U.S. Treasury yields increased across maturities last week. 10-year yields ended 21 basis points (bps) higher at 3.68%, while 2-year yields rose 28 bps. The moves were mostly driven by hawkish rhetoric from Fed officials. Dallas Fed President Logan signaled that she may support additional rate hikes as soon as June. Most other Fed officials suggested they support a pause. Chair Powell declined to repeat this hawkish language, but continued to push back against market pricing for rate cuts later this year. As a result, markets are pricing in a 17% chance of a hike next month and 45 bps of rate cuts over the second half of the year, down from 70 bps of cuts priced before the Fed speeches.

Investment grade corporates sold off alongside the move in Treasuries, returning -1.47% for the week. However, spreads tightened and the asset class outperformed similar-duration Treasuries by 12 bps. Inflows were sizable, with $4.2 billion entering the asset class, the most in six weeks. That helped the market digest a surprisingly heavy week of new issuance, led by the third-largest deal of all time: a $31 billion bond deal from Pfizer to finance the acquisition of Seagan. Overall, new issue supply was around $61 billion and concessions were around 13 bps on average.

High yield corporates returned -0.43%, but outperformed similar-duration Treasuries by 51 bps. Senior loans returned 0.01%. Lower-quality market segments outperformed, helped by their generally shorter duration profile. High yield and loan funds had outflows of -$1.2 billion and -$954 million, respectively, while new issuance in the two markets totaled $4.2 billion and $1.2 billion, respectively. A few deals had to revise pricing wider to induce enough demand to be completed, as investors are still discriminating when it comes to credit quality.

Emerging markets also weakened, returning -1.13% but beating similar-duration Treasuries by 31 bps. In the hard currency sovereign space, investment grade spreads tightened -7 bps, while high yield spreads narrowed only -1 bps. A few idiosyncratic dynamics dragged on the high yield segment, as Turkey (-9 points in price) and Ecuador (-5 points) both underperformed due to local politics. Hard currency funds had their fourteenth consecutive week of outflows at -$857 million. Across emerging markets, there was more than $12 billion of new issuance, though concessions were relatively narrow at around 10 to 15 bps.

Municipal bonds sell off due to outsized new supply

Municipal bond yields rose substantially last week, due primarily to outsized new issuance. Short-term yields rose 36 bps, while longer-term rates increased 16 bps. Underwriters struggled to get new deals sold, and fund flows were negative for the fourteenth consecutive week.

It’s good news/bad news for fixed income markets. First the bad news: Markets are skittish due to uncertainty surrounding the U.S. debt ceiling, the potential that the Fed could raise rates again in June, and the billions of dollars of bonds being force-liquidated from the portfolios of failed banks. In addition, municipal bond new issuance has been outsized over the last few weeks.

We think the good news should overcome the bad: More than $105 billion of muni reinvestment money is expected over the next three months. Also, inflation is clearly falling. If the Fed continues to raise short-term rates, it would be because inflation is not falling fast enough. 

Clark Country, Nevada, issued $200 million highway revenue bonds (rated AA3/AA-). The deal included 5% coupon bonds due in 2033 that came at a yield of 2.65%. Those bonds traded in the secondary market at 2.88%, demonstrating the dramatic market sell off last week.

High yield municipals credit spreads contracted last week. High yield muni yields increased 13 bps on average versus 18 bps for high grades. New issuance is expected to be light again this week. After last week’s yield adjustments, there should be attractive opportunities in the secondary market. High yield municipal bond fund flows turned slightly negative last week, but large June 1 cash flows are expected to bolster demand.

Investment grade corporates sold off, but spreads tightened and the asset class outperformed similar-duration Treasuries.

In focus: Emerging markets debt poised to rebound 

After struggling in 2022, emerging markets debt has delivered positive returns this year, aided by several tailwinds. We believe an allocation to this dynamic and often-overlooked asset class merits consideration for long-term, diversified investors.

EMD has benefited from the elimination of China’s zero-Covid policies (given the country’s economic clout) and from a slowdown in the U.S. dollar’s 2022 rally fueled by aggressive Fed monetary policy. We expect the Fed to keep rates elevated for some time due to persistently high levels of inflation, but even a pause in tightening policy would help weaken the greenback, making it easier for EM countries to service and pay off dollar-denominated debt.

AEMD yields are attractive. Based on the JPM EMBI-GD Index, EM hard currency sovereigns (+8.7% yield) offer similar payouts to those on U.S. high yield bonds (+8.9%) but consist of 52% investment grade bonds based on market capitalization. In EM high yield, issues rated B (+11.3%) and BB (+7.4%) provide yields in line with, or greater than, their U.S. counterparts.

Looking ahead, the International Monetary Fund projects that EM economic growth will easily surpass GDP expansion in advanced economies this year and next. Many EM central banks are in the position to begin cutting rates, and the ongoing post-Covid reopening across the broad EM sphere should spur demand.

Table of information for U.S. Treasury market, municipal market, yield ratios, and characteristics and returns
Performance: Bloomberg L.P.
Issuance: The Bond Buyer, 19 May 2023.
Fund flows: Lipper.
New deals: Market Insight, MMA Research, 17 May 2023.

Any reference to credit ratings refers to the highest rating given by one of the following national rating agencies: S&P, Moody’s or Fitch. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below-investment grade ratings.

Representative indexes: municipal: Bloomberg Municipal Index; high yield municipal: Bloomberg High Yield Municipal Index; short duration high yield municipal: S&P Short Duration Municipal Yield Index; taxable municipal: Bloomberg Taxable Municipal Bond Index; U.S. aggregate bond: Bloomberg U.S. Aggregate Bond Index; U.S. Treasury: Bloomberg U.S. Treasury Index; U.S. government related: Bloomberg U.S. Government-Related Index; U.S. corporate investment grade: Bloomberg U.S. Corporate Index; U.S. mortgage-backed securities; Bloomberg U.S. Mortgage-Backed Securities Index; U.S. commercial mortgage-backed securities: Bloomberg CMBS ERISA-Eligible Index; U.S. asset-backed securities: Bloomberg Asset-Backed Securities Index; preferred securities: ICE BofA U.S. All Capital Securities Index; high yield 2% issuer capped: Bloomberg High Yield 2% Issuer Capped Index; senior loans: Credit Suisse Leveraged Loan Index; global emerging markets: Bloomberg Emerging Market USD Aggregate Index; global aggregate: Bloomberg Global Aggregate Unhedged Index.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on Please note, it is not possible to invest directly in an index.

Important information on risk
Investing involves risk; principal loss is possible. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, derivatives risk, dollar roll transaction risk and income risk. As interest rates rise, bond prices fall. Below investment grade or high yield debt securities are subject to liquidity risk and heightened credit risk. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure and therefore are subject to greater credit risk. Foreign investments involve additional risks, including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. These additional risks may be heightened for securities of issuers located in, or with significant operations in, emerging market countries as such countries may have a higher degree of economic instability, unsettled securities laws and inconsistent regulatory systems.

Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio. If sold prior to maturity, municipal securities are subject to gain/losses based on the level of interest rates, market conditions and the credit quality of the issuer. Income may be subject to the alternative minimum tax (AMT) and/or state and local taxes, based on the state of residence. Income from municipal bonds held by a portfolio could be declared taxable because of unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. It is important to review your investment objectives, risk tolerance and liquidity needs before choosing an investment style or manager.

Nuveen provides investment advisory solutions through its investment specialists.
Aerial view of the ocean shore

You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Global Cities REIT

You are leaving the Nuveen website.

You are leaving the Nuveen website and going to the website of the MI 529 Advisor Plan, distributed by Nuveen Securities, LLC.

The Nuveen website for institutional investors is available for you.

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Churchill Private Capital Income Fund (“NC - PCAP”)

Contact us
Contact us
Back to Top