• As we have reported, MUNI sales are up ~21% this year compared to last year’s volume. State and local governments have sold $153 billion in new debt in the second quarter, already the largest ever, with just four trading days remaining in the period. The markets have absorbed this paper well; longer-dated paper is still hovering around 5%. However, the 20-year paper seems to be moving down slightly in yield despite this record issuance.

• A small city in Washington State filed a rare municipal bankruptcy after failing to reach an agreement with a developer over a $26 million court judgment. Cle Elum (population of 2200) filed the rare city BK. If you hold these bonds, please check with your broker regarding the outcome or contact us directly.

• Investors are adding capital to MUNI bond funds; just over the last week, 244MM has been added, while the prior week saw a $1.27 billion inflow. Investors are taking advantage of the higher yields, which is one of the primary reasons the markets are holding.

• The Fed unveiled a plan to roll back a vital capital rule that big banks have said limits their ability to hold more Treasuries and act as intermediaries in the $ 29 trillion market. This revision would reduce the capital requirement for holding companies under the ratio to a range of 3.5% to 4.5%, down from the current 5%. This would enable banks to buy and hold more T-bills from an investment standpoint.

• Powell indicated on June 25 that the Central Bank continues to struggle to determine the impact of tariffs on consumer prices. “The question remains, who is going to pay for the tariffs?” Powell indicated. It is challenging to predict how much of the tariff increase in pricing will be reflected in the inflation rate. We (and others) have been reporting that there will be no rate moves until the FED understands how tariffs will impact pricing.

• Waller and Bowman have indicated that they could support a rate cut as soon as the July meeting; however, the window for gathering data before this meeting is narrow. Only one CPI report will be published before the July meeting, and even if this report shows “disinflation,” we and others continue to think there will be no cut.

• As of June 23, economists’ median forecast was for CPI inflation at 3% this year, with recent estimates at 3.3%, while Bloomberg is calling for a 2.8% CPI in their baseline forecasts. One reason for this baseline forecast is that the pass-through from tariffs this year is expected to be modest due to import stockpiling, slight increases in profit margins, and a cooling labor market. The bottom line is that CPI should continue to decline over the next few months, which should further support pricing on fixed-income assets.

• Goolsbee indicated the central bank could resume interest rate cuts if the inflation hit from tariffs remains subdued. This is the third time we have heard this over the last 24 hours. Goolsbee referenced that in the previous three months, we have not had “that much inflation,” which could lead to a cut sooner than later. We continue to believe that we will see 1 to 2 cuts this year, leaning towards two.

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Securities offered through NewEdge Securities, LLC, member FINRA and SIPC. The DRL Group is not a subsidiary or control affiliate of NewEdge Securities, LLC. NewEdge Securities, LLC. has no affiliation to BondDesk Trading LLC or BondTrader Pro, or Tradeweb Direct, Bondpoint, TMC, Market Axess or any ECN.

Yield to call (YTC) is not indicative of total return; this yield is valid only if the security is called. Bonds may or may not be called, or be callable on multiple dates or, in other cases, called any date following the first call date, so yield to call is based on the earliest stated call date. Discounted bonds may be subject to capital gains tax. Bonds may be subject to OID (Original Issue Discount). Prices and availability may change at anytime without notice.

Do not buy bonds based on the Yield to Call (YTC). Insured bonds are issued for timely payment of principal and interest only. Insured bonds do not cover potential market loss and are subject to the claims paying ability of the insurance company.

Non-rated (NR), With-Drawn (WR), or below investment grade bonds, lower rated bonds, carry a greater potential risk of default & should be considered by sophisticated investors only.

This document is for informational purposes only and does not replace or serve as a substitute for your official monthly statement generated by NFS. Please refer to your official statement for accurate and comprehensive account details.

Bonds may be subject to capital gains tax. This summary is for informational purposes only and is not an offer or solicitation for the purchase or sale of any security or a recommendation or endorsement of any security or issuer. NewEdge Securities, LLC. and DRL Group make no representation about the accuracy, completeness, or timeliness of this information. Bonds could also be subject to the DeMinimis Rule, please consult with your tax advisor for further clarification.

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