Reinhart Week in Review by Madison Investments 9.06.2024

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EMPLOYMENT

Nonfarm payrolls rose by 142,000 jobs in August, slightly underperforming expectations. The unemployment rate fell from 4.3% to 4.2% while the labor force participation rate was unchanged at 62.7%. Average hourly earnings grew by 0.4% and are up 3.8% year-over-year.

Our Take: Nonfarm payrolls grew slightly less than the anticipated 160,000 increase. Additionally, the drop in the unemployment rate was likely due to a reversal of the effects from the hurricane in Texas that potentially distorted the outsized July increase. All told, this month’s employment report was not weak enough to significantly aid the case for a 50-basis point rate cut.

MUNICIPALS

Municipal bond issuance reached nearly $50 billion during August, an increase of 25% over August 2023. August marks the eighth consecutive month of increased issuance. Year-to-date issuance has topped $335 billion, an increase of 34% compared to last year.

Our Take: Many municipalities and school districts have been issuing debt ahead of the fall election in an effort to avoid possible volatility in the markets as the election nears. According to Bloomberg, the August issuance figure was one of the largest since October 2020, as municipalities rushed to issue debt ahead of the 2020 election.

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.
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.