Contact us
Contact Nuveen
Thank you for your message. We will contact you shortly.
Key takeaways
- July retail sales fell 0.6% and CPI/PPI stayed benign, reducing expectations for a September Fed rate hike.
- Despite soft data, Treasury auctions cleared at multidecade highs, steepening the 2s/10s curve to roughly 52 bps.
- Nuveen expects the Fed to hold rates steady and favors high-quality income, with steepening creating potential opportunity in intermediate maturities.
Market recap
Economic data and long-end supply pressure pulled markets in opposite directions this week. July retail sales fell 0.6% – the largest decline since May 2025 – while CPI and PPI both came in benign, further reducing expectations for a September U.S. Federal Reserve rate hike. Still, 10- and 30-year Treasury auctions cleared at multidecade highs, keeping long-end yields elevated. The 2s/10s curve steepened to approximately 52 basis points (bps), its widest since May, as soft data relieved front-end pressure while fiscal concerns weighed on duration. The dollar fell to its lowest level since May.
Returns were mixed as long-end rates rose modestly. The Bloomberg Aggregate U.S. Bond Index returned -0.14%, investment grade corporates -0.29% and preferreds -0.17%. High yield returned +0.14% and emerging markets +0.03%, while MBS returned -0.13%.
Fixed income outlook from this week’s activity
We expect the Fed to remain on hold, as benign CPI and weak retail sales have materially reduced expectations for a September hike. Fed officials offered a range of views this week, from hawkish calls for near-term action to more balanced assessments that much of current inflation stems from shocks that should fade. We expect the data-dependent framework to persist and forecast a range of 4.25%-4.50% for the 10-year U.S. Treasury yield at year-end 2026.
Credit fundamentals remain broadly supportive. Investment grade primary markets absorbed a massive $56 billion week without meaningful spread disruption, underscoring resilient investor demand. We favor carrying high-quality income, as spread sectors offer attractive all-in yields at elevated levels, with curve steepening creating particular opportunity in intermediate maturities.
Weekly fixed income performance snapshot
U.S. Treasuries
The curve steepened materially as soft data eased front-end pressure while long-end auctions cleared at multi-decade highs. The 10-year auction cleared at its highest yield since 2007, the 30-year its highest since 2001. A sharp Friday retail sales miss briefly pushed 2-year yields below 4.10% before they rebounded. The 2s/10s spread widened to approximately 52 bps, its widest since May.
The 2-year yield fell 2 bps to 4.17%, the 5-year rose 1 bp to 4.37%, the 10-year rose 5 bps to 4.69%, the 20-year rose 5 bps to 5.26% and the 30-year rose 6 bps to 5.26%.
Tax-exempt municipals
Tax-exempt municipals outperformed Treasuries and broader fixed income with positive returns. Attractive income levels keep us favoring longer duration, and we view recent rate volatility as a potential buying opportunity at compelling yields. August seasonals remain supportive for technicals.
The Bloomberg Municipal Index returned +0.12%.
Taxable municipals
Taxable munis declined modestly as curve steepening pressured the sector’s longer-duration profile. Year-to-date returns remain essentially flat, though elevated yields continue to draw crossover demand.
The Bloomberg Municipal Taxable Index returned -0.20% with spreads at 51 bps.
Investment grade corporates
Companies issued $56 billion in new investment grade bonds from 37 issuers, one of the busiest weeks this year. Despite the heavy volume, spreads over Treasuries held steady near 79 basis points. Investors grew more selective as the week progressed, and issuers had to offer slightly better pricing to attract buyers by week’s end. Fund inflows slowed, but yields above 5.4% continue to draw income-focused investors.
The Bloomberg U.S. Corporate Bond Index returned -0.29% with spreads at 79 bps.
U.S. high yield corporates
High yield posted a positive return as softer data and reduced hike expectations lifted risk appetite. New issue volume more than doubled from the prior week as the market reopened after a quieter stretch. A risk-on tone following the benign CPI print drove strong primary activity midweek, and fund inflows continued, reinforcing constructive technicals.
The Bloomberg High Yield 2% Issuer Capped Index returned +0.14% with spreads at 266 bps.
Preferred securities
Preferred securities declined modestly as the rates backup weighed on the sector’s longer duration profile. New issuance stayed active, with several bank and utility perpetual deals pricing. Spreads widened modestly, driven by rates rather than deteriorating credit.
The ICE Preferred Index returned -0.17% with spreads at 160 bps.
Senior loans
Loans posted a positive return, with secondary market prices rising for seven consecutive sessions. Primary market activity centered on refinancings and repricings, while fund inflows hit their largest weekly total since January. Compressed spreads continued to support prices as supply-demand dynamics favored existing holders.
The S&P Leveraged Loan Index returned +0.24% with spreads at 481 bps.
Securitized credit
Agency MBS declined modestly as the long end sold off, though the sector outperformed similar-duration Treasuries on an excess return basis. ABS saw heavy issuance across consumer and esoteric sectors with solid demand. CMBS stayed active with multiple conduit deals pricing, while CLO activity was heavy across new issue and reset transactions.
The Bloomberg MBS Index returned -0.13% with spreads at 27 bps. The Bloomberg CMBS Index returned +0.07% with spreads at 65 bps. The Bloomberg ABS Index returned +0.07% with spreads at 43 bps.
Global emerging markets
Emerging markets assets posted a modest positive return as a weaker dollar and reduced hike expectations supported EM currencies and local rates. EM exchange-traded funds logged their fourth consecutive week of inflows. African local-currency debt outperformed peers on high yields and reform momentum, while certain Central and Eastern Europe (CEE) markets saw yields rise as investors positioned for regional rate hikes.
The Bloomberg Global EM Index returned +0.03% with spreads at 160 bps.
U.S. Treasury market yields
| Maturity | Yield | Week | Month-to-date | Year-to-date |
|---|---|---|---|---|
| 2-year | 4.17 | -0.02 | -0.12 | 0.70 |
| 5-year | 4.37 | 0.01 | -0.09 | 0.64 |
| 10-year | 4.69 | 0.05 | -0.04 | 0.52 |
| 30-year | 5.26 | 0.06 | -0.01 | 0.42 |
| Source: Bloomberg L.P., 14 Aug 2026. Performance data shown represents past performance and does not predict or guarantee future results. | ||||
As soft data eases pressure on the front end of the curve and fiscal concerns weigh on the long end, we feel intermediate maturities are emerging as the sweet spot for investors.
Fixed income investment characteristics and returns
| Index | Yield to worst (%) | Spread (bps) | Effective duration (years) | Returns (%) | ||
|---|---|---|---|---|---|---|
| Week | Month-to-date | Year-to-date | ||||
| U.S. Treasury | 4.51 | - | 5.77 | -0.10 | 0.38 | -0.46 |
| U.S. government related | 4.86 | 36¹ | 5.22 | -0.01 | 0.53 | 0.26 |
| Municipal | 3.81 | - | 6.69 | 0.12 | 0.80 | 1.23 |
| High yield municipal | 5.58 | 153² | 7.27 | 0.12 | 0.90 | 3.43 |
| Taxable municipal | 5.28 | 51¹ | 7.49 | -0.20 | 0.49 | -0.02 |
| U.S. aggregate bond | 4.92 | 28¹ | 5.89 | -0.14 | 0.46 | -0.24 |
| U.S. corporate investment grade | 5.42 | 79¹ | 6.62 | -0.29 | 0.37 | -0.47 |
| High yield 2% issuer capped | 7.20 | 266¹ | 2.92 | 0.14 | 0.87 | 2.59 |
| Preferred securities | 6.51 | 160¹ | 5.55 | -0.17 | 0.08 | 1.18 |
| Senior loans³ | 8.87 | 481 | 0.25 | 0.24 | 0.51 | 2.69 |
| U.S. mortgage-backed securities | 5.21 | 27¹ | 5.68 | -0.13 | 0.69 | 0.24 |
| U.S. commercial mortgage-backed securities | 4.99 | 65¹ | 3.68 | 0.07 | 0.48 | 0.86 |
| U.S. asset-backed securities | 4.71 | 43¹ | 2.99 | 0.07 | 0.35 | 1.31 |
| Collateralized loan obligations, AA | 5.13 | 123¹ | 0.25 | 0.14 | 0.26 | 3.29 |
| Collateralized loan obligations, BB | 11.89 | 763¹ | 0.25 | 0.31 | 0.58 | 3.41 |
| Global emerging markets | 6.13 | 160¹ | 5.82 | 0.03 | 0.82 | 1.52 |
| Global aggregate (unhedged) | 3.98 | 28¹ | 6.21 | -0.14 | 0.53 | -0.22 |
| 1 Option-adjusted spread to Treasuries. 2 Yield difference between the Bloomberg High Yield Municipal Index and the 20-year AAA MMD scale. 3 Spread refers to the 3-year discount margin. Duration is estimated based on the frequency of the reset date. Source: Bloomberg L.P. and Standard & Poor’s, 14 Aug 2026. Performance data shown represents past performance and does not predict or guarantee future results. Unless otherwise noted, the index is Bloomberg. All index returns are shown in U.S. dollars. Yield to worst is the lowest potential yield that can be received on a bond without the issuer actually defaulting. Effective duration (expressed in years) measures the price sensitivity of a fixed-income investment to a change in interest rates, considering that expected cash flows will fluctuate as interest rates change. Index performance is shown for illustrative purposes only. Index returns include reinvestment of income and do not reflect investment advisory and other fees that would reduce performance in an actual client account. |
||||||
Related articles
Contact us
You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors
Representative indexes: U.S. Treasury: Bloomberg U.S. Treasury Index; U.S. government related: Bloomberg U.S. Government-Related Index; municipal: Bloomberg Municipal Index; high yield municipal: Bloomberg High Yield Municipal Index; taxable municipal: Bloomberg Taxable Municipal Bond Index; U.S. aggregate bond: Bloomberg U.S. Aggregate Bond Index; U.S. corporate investment grade: Bloomberg U.S. Corporate Index; high yield 2% issuer capped: Bloomberg High Yield 2% Issuer Capped Index; preferred securities: ICE BofA U.S. All Capital Securities Index; senior loans: S&P UBS Leveraged Loan 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; CLO AA: J.P. Morgan Collateralized Loan Obligation AA Index; CLO BB: J.P. Morgan Collateralized Loan Obligation BB 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 nuveen.com. 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 risks may be magnified in emerging markets. Asset-backed and mortgage-backed securities are subject to additional risks such as prepayment risk, liquidity risk, default risk and adverse economic developments. The value of convertible securities may decline in response to such factors as rising interest rates and fluctuations in the market price of the underlying securities. Senior loans are subject to loan settlement risk due to the lack of established settlement standards or remedies for failure to settle. These investments are subject to credit risk and potentially limited liquidity, as well as interest rate risk, currency risk, prepayment and extension risk, and inflation risk. Any investment in collateralized loan obligations or other structured vehicles involves significant risks not associated with more conventional investment alternatives.
Investors should contact a tax professional regarding the appropriateness 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, LLC provides investment solutions through its investment specialists.
This information does not constitute investment research as defined under MiFID.
Not registered yet? Register
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 DMAT Cart
You are about to access our website for Nuveen Churchill Private Capital Income Fund (“NC - PCAP”)
