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Manager says market shifts after Iran conflict have lifted yields, changing reinvestment outlook
Summary
Investment manager Jim McCourt told the committee that geopolitical developments and higher energy prices have pushed inflation expectations up, flipping futures-market expectations from multiple cuts to pricing 1–2 rate hikes and creating higher reinvestment yields for the county portfolio.
Jim McCourt framed the investment review around recent macro developments, telling the committee that geopolitical events and rising energy prices have altered investor expectations and the yield curve.
"The Fed is actually starting, an FOMC meeting today, so they'll have a policy announcement tomorrow," McCourt said, noting market pricing shifted since early 2026. He said futures markets that earlier in the year priced multiple cuts have now moved toward pricing one to two possible rate hikes by year‑end, which has pushed short- and intermediate-term yields higher and created better reinvestment opportunities for maturing bonds.
McCourt cautioned that while markets are pricing the possibility of hikes, policy actions are governed by the Federal Open Market Committee and outcomes remain uncertain; the practical effect for the county, he said, is that reinvesting maturing securities now can lock in higher yields that should lift portfolio income.
