Reinhart Week in Review by Madison Investments 03.14.2025

Current Category
Commentary
Other Categories
Updates & News
Regulatory Documents
Videos
White Papers
Subscribe to the Reinhart Week In Review
Download PDF

INFLATION

Both the Consumer Price Index (CPI) and the core CPI, excluding food and energy, rose 0.2% in February.  Year-over-year, consumer prices are up 2.8% while core CPI has risen 3.1%. Producer prices (PPI) were flat in February and are up 3.2% over the last twelve months.

Our Take: Both PPI and CPI were lower than expected in February. The effect of tariffs is not represented in the February numbers, so the risk of inflation due to government policy remains. Otherwise, inflation moderated, moving closer to the Fed’s 2% goal. 

 

GERMANY

Incoming German Chancellor Friedrich Merz reached a deal with the Social Democratic Party (SPD) and the Greens to lift constitutional deficit caps for defense and infrastructure spending. This change will require a 2/3 majority in the Bundestag and is being rushed through before the newly elected legislature is seated on March 25.

Our Take: Germany’s debt brake has allowed the country to maintain fiscal discipline, but given recent geopolitical and economic developments, there is a need for investment and Germany has the fiscal capacity for this expansion. This increased spending is likely to put upward pressure on Bund yields and provide a short-term boost for the German and EU economy.

 

MUNICIPALS

Municipal issuance through the end of February reached nearly $73.9 billion, a 13.6% increase year-over-year according to the Securities Industry and Financial Markets Association (SIFMA). February issuance reached $33.7 billion, up slightly from February 2024's $33.2 billion. 

Our Take: Strong municipal issuance continues even though the February 2025 figure is a touch lower than the January 2025 issuance number. Indications that 2025 could be a record year for municipal issuance remain. Municipalities have been refinancing existing debt and issuing debt to finance infrastructure projects as pandemic aid expires.

About Reinhart Fixed Income
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

Any performance data shown represents past performance. Past performance is no guarantee of future results.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

This website is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.
Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Madison Investment Holdings, Inc. acquired the fixed income management assets of Reinhart Partners, Inc. on June 11, 2021 and now employs the Investment Team that previously managed the assets at Reinhart. The Investment Team manages the assets using substantially the same strategies and objectives as at Reinhart. Performance information dated prior to the purchase reflects that of Reinhart Partners, Inc.

Quality refers to the bond ratings provided by the various third-party ratings agencies. Stability and predictability refer to the cash flow of individual securities and not to the market value or performance of portfolio holdings. There is no guarantee this strategy will lead to investment success.

In addition to the ongoing market risk applicable to portfolio securities, bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally, the longer a bond’s maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer.

A basis point is one hundredth of a percent.