Archived Update

Texas

Texas Issuer Impact

Strategic Signals & Commentary
Favorable

Refunding

Opportunity

AA-rated PSF-guaranteed ISD paper trading inside +5 to AAA MMD. Callable 2017 coupons of 4.00-5.00% produce 3-5% PV savings; qualifying current refundings warrant Board authorization now.

Favorable

New Money

Opportunity

District-voted authorization executions remain favorable. Intermediate PSF-enhanced structures clearing at sub-3.50% TIC; front-loaded 5% coupons maximize proceeds for construction draws.

Geopolitical & Treasury Market Overview

Treasury yields rose across the curve last week, increasing by 9-12 basis points, as geopolitical developments remained a primary driver of market sentiment. Hostilities in the Middle East re-emerged as Iran struck ships in the Strait of Hormuz and the U.S. targeted military sites in Iran, sending oil prices to the low $70s per barrel. President Trump declared that the ceasefire was over and described it as a waste of time. Iranian funds remain frozen, Iranian oil exports continue to be embargoed, and naval traffic through the Strait of Hormuz has slowed again - developments that continue to influence both energy markets and interest rates.

Inflation & Federal Reserve Expectations

Markets enter an important week for inflation data ahead of the Federal Reserve's next policy meeting. Current pricing anticipates no change in rates at the July 29 FOMC meeting and an 85% probability of a rate hike at the September 16 meeting, driven by increasing inflationary pressures across the economy. The new Fed Chairman gives his semi-annual testimony to Congress this week, and a number of Fed governors speak ahead of the blackout period that begins Saturday.

This Week - Economic Calendar

No major Treasury coupon auctions this week, with issuance limited to Treasury bills. Key releases: June CPI on Tuesday (Core est. +0.2% MoM, +2.8% YoY), June PPI on Wednesday (Core est. +0.3% MoM), and June Retail Sales on Thursday (+0.2% est.), reflecting continued strength in consumer demand.

Macro Outlook

This week's market direction is expected to be driven primarily by the key inflation reports, Fed commentary ahead of the blackout period, and ongoing geopolitical developments in the Middle East. With markets pricing no action in July but a high probability of a September rate hike, incoming inflation data will be closely watched for confirmation of increasing inflationary pressures.

AAA MMD Yield Curve

Current Week Prior Month Prior Year

Federal Reserve & Market Expectations

Fed Funds Target
4.25% - 4.50%
FOMC Stance
On hold; no change expected at the July 29 FOMC, with an 85% probability of a hike at the September 16 meeting on increasing inflationary pressures
Meeting Hold Cut Hike
Jul 2026 97% 0% 3%
Sep 2026 15% 0% 85%

Implied probabilities derived from 30-Day Fed Fund futures (CME FedWatch).

U.S. Treasury Benchmarks

Tenor Current Δ WoW Prior Wk Prior Mo Prior Yr 8-Wk Trend
2Y 4.21% +7 bp 4.14% 4.13% 3.86%
5Y 4.30% +7 bp 4.23% 4.27% 3.93%
10Y 4.56% +7 bp 4.49% 4.55% 4.35%
30Y 5.06% +8 bp 4.98% 5.03% 4.86%

Municipal AAA MMD Benchmarks

Tenor Current Δ WoW Prior Wk Prior Mo Prior Yr 8-Wk Trend
1Y 2.33% — 2.33% 2.61% 2.64%
5Y 2.63% +5 bp 2.58% 2.73% 2.75%
10Y 2.97% +2 bp 2.95% 3.09% 3.32%
20Y 3.86% — 3.86% 4.02% 4.30%
30Y 4.30% — 4.30% 4.46% 4.54%