Reinhart Week in Review by Madison Investments 06.06.2025

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EMPLOYMENT

The economy added 139,000 jobs in May, exceeding expectations of a 126,000 increase. Revisions to the previous two months subtracted 95,000 jobs. The unemployment rate remained at 4.2%. Average hourly earnings rose 0.4% for the month and are up 3.9% year-over-year. The labor force participation rate decreased from 62.6% to 62.4%.

Our Take: Job growth above expectations in May was tempered by downward revisions to the previous two month’s reports. Additionally, the household survey indicated a large decline in jobs. The unemployment rate did not change only because labor force participation also fell. The labor market appears to still be growing, but at a slowing pace. 

 

EUROPE

As expected, the European Central Bank (ECB) cut rates by 25 basis points at their June meeting. The deposit facility rate, the rate through which the ECB directs monetary policy, now stands at 2.0%. ECB President Christine Lagarde said the ECB decision was “based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.”

Our Take: The ECB felt comfortable cutting rates for the eighth time during this easing cycle as inflation is around their 2% target. The ECB reiterated their adherence to data-dependency but there are indications that this may be the last cut for a while. ECB Governing Council members are concerned about potential inflationary effects from trade shocks and are likely to pause their rate cutting until a clearer economic picture develops.

 

MUNICIPALS

Illinois lawmakers approved a $55.2 billion state budget plan right before the June 1 deadline. The budget for the next fiscal year will take effect on July 1. While no new income, sales or service taxes were added, the budget includes new taxes on gambling and nicotine. In addition, a delinquent tax payment incentive program will begin, which will help Illinois collect overdue tax payments. 

Our Take: Many Illinois lawmakers applauded the on-time passage of the 2026 budget plan. The budgeting process in Illinois, along with other states, became more complicated this year as some federal funding amounts remain uncertain.

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.

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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.

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.