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The Treasury yield curve steepened slightly as the short end of the curve fell, and both the 10-year and 30-year yield rose 3 bps. Municipal yields were relatively unchanged, with the 10-year and 30-year yield both falling 1 bp. Municipal bond funds experienced over $1.2 billion of inflows, marking the sixth consecutive week of positive fund flows. The October jobs report was not released on Friday due to the federal shutdown. U.S. manufacturing activity contracted further in October, marking the eighth consecutive monthly decline and the 34th contraction in the past 36 months. Meanwhile, economic activity in the services sector returned to expansion in October, reaching its highest level in eight months. However, survey responses underscored ongoing policy and macroeconomic uncertainty due to tariffs, the prolonged government shutdown and shifting regulations. As such, consumer sentiment deteriorated in November, slipping close to its lowest levels in nearly 50 years. The CPI report is scheduled to be released on Thursday and is expected to show an increase of 0.2% MoM and 3.1% YoY. Fed fund futures continue to price an additional rate cut in December’s FOMC meeting.

Treasury yields increased, as the 10-year and 30-year yield rose 9 bps and 8 bps, respectively. Municipal yields followed to a lesser extent, with the 10-year and 30-year yield rising 3 bps and 5 bps, respectively. Municipal bond funds experienced nearly $720 million of inflows, marking the fifth consecutive week of positive fund flows. As widely anticipated, the Federal Reserve delivered its second consecutive 25 bp interest rate cut this year. However, forward guidance remained vague, with Chair Powell stating in the post-meeting press conference that a December rate cut is “not a foregone conclusion,” which provided a catalyst for the bond market sell-off. Consumer confidence edged slightly lower in October, marking the weakest reading in six months. While consumers' views of current job availability improved for the first time since December 2024, their labor market outlook deteriorated further in October. The jobs report will be released on Friday, with expectations for the jobless rate to increase to 4.4% as federal job losses start to materialize.