Ahead of FOMC meeting, two-year yields rise to 4%, yield curve inversion deepens and financial conditions tighten.

This just in from my colleague Cooper Howard: It’s shaping up to be a wild day in #muniland. Munis are finally waking up to the prospect of tighter monetary policy. Since the start of the year, yields are up relative to Treasuries. The biggest move has been in short-term munis where spreads were very low.

A thread about #CorporateBonds prepared by my colleague Collin Martin. Investment grade corporate bonds have been hit by the double whammy of rising #Treasury yields and rising spreads this year.

Ahead of the release of the FOMC minutes, the discussion has moved from the timing and magnitude of rate hikes to reducing the balance sheet. Even doves are on board with moving faster than in the post financial crisis era because inflation and growth are much stronger. Comments from Fed officials imply many options are on the table.