Reinhart Week in Review by Madison Investments 09.19.2025

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THE FED

As expected, the Fed cut rates by 25 basis points this week, bringing the federal funds rate to a range of 4.00%–4.25%. The move follows signs of cooling job growth and inflation that remains above target. The updated Summary of Economic Projections (“dot plot”) shows the Fed expects two more cuts this year and one in 2026, with greater uncertainty in the path beyond. The Federal Open Market Committee (FOMC) statement and Chair Powell’s remarks reflect a shift toward a more neutral stance, as the Fed balances upside inflation risks with growing downside risks to employment and watches for further tariff-related price pressures.

Our Take: This week’s cut reflects a shift in focus toward rising labor market risks, even as inflation remains above target. The Fed is cautiously moving toward a more neutral stance as it seeks to balance inflation and employment concerns.

 

RETAIL SALES

Retail sales rose 0.6% in August, outpacing expectations of a 0.2% increase. The retail sales control group, which feeds GDP calculations, rose 0.7% versus expectations of a 0.4% increase.

Our Take: Retail sales in the third quarter point to relatively strong consumer demand and an improving economy.

 

MUNICIPALS

Municipal issuance has topped $400 billion year-to-date through the end of last week. This amount is approximately 17% higher than the same period last year according to Bloomberg. Outstanding municipal debt as of the end of June had reached $4.3 trillion according to the Securities Industry and Financial Markets Association (SIFMA), a 3.7% year-over-year increase.

Our Take: State and local governments continue to tap the municipal bond market at a strong pace this year. Many municipal issuers issued debt in advance of the One Big Beautiful Bill as uncertainty surrounding changes to municipal bonds existed prior to its passage. In addition, costs for infrastructure projects have risen, leading to a need for additional funding. Issuance could remain strong through the end of the year, especially if state and local governments find it favorable to refinance existing debt at lower interest rates.

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.

A basis point is one hundredth of a percent.

The federal funds rate is the target interest rate range set by the Federal Open Market Committee (FOMC) for banks to lend or borrow excess reserves overnight. It influences monetary and financial conditions, short-term interest rates, and the stock market.

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.

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.