Reinhart Week in Review by Madison Investments 11.07.2025

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

EMPLOYMENT

Due to the government shutdown, the Bureau of Labor Statistics (BLS) has now missed a second employment report. Data from private sources paint a picture of weakening private employment growth. These sources are somewhat reliable in indicating the direction of BLS data, and these reports do not have strong data for the supply side of the labor market or for wage changes.

Our Take: Both market participants and the Fed are missing crucial data at a time when the extent of labor market slowing and the balance of this slowing with lower labor supply are some of the most important inputs into investing and policymaking decisions.

 

TRADE

The Supreme Court heard oral arguments in the case challenging the legality of the Trump administration’s reciprocal and fentanyl tariffs. Based on the questions from a number of justices, it seems more likely that the court will uphold lower court rulings that the president exceeded his authority under the International Emergency Economic Powers Act (IEEPA). Prediction markets shifted significantly in this direction following the oral arguments.

Our Take: Wednesday’s hearing added even more uncertainty around trade policy and tariff levels than had already existed. Uncertainty tends to cause businesses to pull back on hiring and investment decisions until they have greater clarity. An invalidation of the tariffs at issue would also worsen the U.S. fiscal picture if tariff revenue is not offsetting some of the budget deficit.

 

MUNICIPALS

Zohran Mamdani, New York City’s mayor-elect, has proposed fast and free buses. The buses would be paid for by raising corporate taxes along with raising taxes on high earners. The bus system is controlled by the Metropolitan Transportation Authority (MTA), which is a state agency. The MTA has $17 billion of transportation revenue debt, which is backed in part by farebox receipts from the subway and bus systems.

Our Take: It is unlikely that free buses will be running anytime soon. The MTA, which has been having its own financial troubles, controls the cost of buses. The credit quality of bonds issued by the MTA could suffer if farebox revenue pledged to debt service disappears and is not replaced by tax increases needing approval by state lawmakers. Also, free buses could change the current landscape of New York City’s transportation system as increased demand would require more buses, drivers and routes, and potentially lead to a decline in subway ridership, which would still require a fare.

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.

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.