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# Fed hikes for the first time since 2023
- URL: https://slippage.ghost.io/fed-hikes-first-time-since-2023/
- Published: 2026-09-18T22:42:27.000Z
- Updated: 2026-09-18T22:42:27.000Z
- Description: The first hike in three years landed a day after foreign bidders abandoned the 20-year auction. It was also the week private credit's identifiers, muni flows and buy-side desks all moved into someone else's hands.
- Author: Vincent Leung
- Tags: Treasury, Data & Technology, Municipal, Asset Management, Venues & Exchanges

## Fed hikes while foreign bids desert the long end

The FOMC raised the target range 25 basis points to 3.75%–4.00% on 16 September, unanimously, the first increase in three years. The median dot now sits at 4.1% for year-end, sixteen of nineteen policymakers project at least one further hike in 2026 and none project a cut; Chair Kevin Warsh said "the plain fact is that inflation is too high and has been for too long" and described the move as removing "a dose of accommodation." Ten-year yields dipped below 4.95% on the statement and were back at 5% after the press conference, with futures pricing roughly 28 basis points of additional tightening for the rest of the year. The more instructive print came the day before. The $13 billion 20-year auction on 15 September stopped at 5.420%, the highest since the bond was reintroduced in 2020, and tailed the when-issued level by 2.0 basis points, the widest tail since 2024; indirect bidders took 52.5% against 62.9% in August and the lowest share in the tenor's six-year history, while direct bidders took a record 30.7% and primary dealers 16.9%.

*Indirects at 52.5% and directs at a record 30.7% mean the marginal buyer of twenty-year duration is now a domestic account bidding for its own book rather than a reserve manager working to a different clock, which makes long-end auction concessions correlate with the risk appetite of the very peers a portfolio is already positioned alongside — and moves the new-issue calendar out of execution and into portfolio construction. Treasury's enlarged buybacks, tripled to $6 billion an operation on 10 September, run against a Fed that is now tightening into them: they buy off-the-run liquidity and nothing about the level.*

[InvestingLive](https://www.google.com/url?q=https://investinglive.com/central-banks/fomc-rate-decision-fed-hikes-for-the-first-time-in-three-years/&source=gmail&ust=1789856581444000&sa=E) · [Charles Schwab](https://www.google.com/url?q=https://www.schwab.com/learn/story/fomc-meeting&source=gmail&ust=1789856581444000&sa=E) · [Yahoo Finance](https://www.google.com/url?q=https://finance.yahoo.com/economy/policy/live/federal-reserve-meeting-live-updates-chairman-kevin-warsh-143452661.html&source=gmail&ust=1789856581444000&sa=E) · [Wolf Street](https://www.google.com/url?q=https://wolfstreet.com/2026/09/15/some-thoughts-on-the-5-42-yield-at-the-20-year-treasury-auction-bond-market-bloodbath-continues/&source=gmail&ust=1789856581444000&sa=E) · [Crypto Briefing](https://www.google.com/url?q=https://cryptobriefing.com/treasury-20y-auction-record-low-foreign-demand/&source=gmail&ust=1789856581444000&sa=E)

## ICE numbers private credit, starting with Apollo's $1.3trn

ICE launched a reference data service for private credit instruments on 17 September, built on the ICE IDs it introduced in July — identifiers assigned at origination that persist through the asset's life, including through credit events. Apollo, the anchor originator, contributed deal-level data on more than 5,000 deals totalling $1.3 trillion of notional, tagged with those identifiers. Chris Edmonds, who runs ICE's fixed income and data services, called reference data "the master data structure that everything else is built off — from security identification and research to secondary market trading"; Apollo's Eric Needleman called standardisation "an essential building block which enables more efficient market activity and stronger investor confidence." No pricing was disclosed. The service sits inside ICE Private Credit Intelligence, the ICE–Apollo venture announced in March, and on a reference data estate ICE puts at over 35 million instruments across more than 210 markets.

*MSCI and Moody's have sold risk assessment across 14,000-plus underlying private credit companies since April 2025 and KBRA has benchmarked 4,000-plus middle-market borrowers since March, so the analytics layer is contested; ICE diverges by going beneath all of it to identity, where nobody currently competes and where the cost of changing your mind later is the entire reconciliation layer rather than a feed subscription. None of the three publishes pricing, so the explicit comparison cannot be made — but the number that matters is internal anyway, because mapping a new identifier through an IBOR, a valuation stack and client reporting is a data-model change with a project budget attached, and the firm proposing it will also own MarketAxess if that deal closes.*

[Markets Media](https://www.google.com/url?q=https://www.marketsmedia.com/ice-launches-private-credit-reference-data-service/&source=gmail&ust=1789856581444000&sa=E) · [ICE](https://www.google.com/url?q=https://ir.theice.com/press/news-details/2026/Intercontinental-Exchange-Announces-Launch-of-ICE-IDs-for-Private-Credit/default.aspx&source=gmail&ust=1789856581444000&sa=E) · [WatersTechnology](https://www.google.com/url?q=https://www.waterstechnology.com/data-management/7953268/memxs-new-options-venue-ice-launches-private-credit-reference-data-and-more&source=gmail&ust=1789856581444000&sa=E) · [MSCI](https://www.google.com/url?q=https://www.msci.com/downloads/documents/press-releases/media-room/MSCI%2520and%2520Moody%27s%2520Launch%2520Private%2520Credit%2520Risk%2520Assessment.pdf&source=gmail&ust=1789856581444000&sa=E) · [KBRA](https://www.google.com/url?q=https://finance.yahoo.com/markets/stocks/articles/kbra-analytics-launches-private-credit-185800914.html&source=gmail&ust=1789856581444000&sa=E)

## Muni flows turn, and the ETF sponsor moves first

Municipal bond funds took $1.814 billion of outflows in the week to Wednesday, ending a 21-week inflow run, with high-yield muni funds losing $583.6 million. A disproportionate share came from the wrapper rather than the end investor: the $3.6 billion Schwab Municipal Bond ETF saw a record $360 million single-day redemption and more than $530 million across September, its worst month since launching in 2022, with Schwab itself holding just over half the shares outstanding. Bloomberg Intelligence's Eric Balchunas said "this looks like the call is coming from inside the house," reading it as model-portfolio reshuffling rather than investor redemptions. The price that produced attracted a different buyer entirely — 30-year MMD at its highest since 2011, long yields up more than 50 basis points since June and taxable-equivalent yields near 8%, drawing insurers and banks; Invesco's Mark Paris put it as "you're looking at equity-like returns and that attracts money," and Alabama's $3.7 billion bridge financing was fifteen times oversubscribed on some tranches. The front end took the damage instead, with Maryland GO 5s of 3/2027 cut 23 basis points to 3.001% and the muni 2s10s spread at 87 basis points against 26 in Treasuries.

*The 11 September edition had munis at 2011 yield levels on a single $460 million outflow day; what changed this week is not the level but the identity of the seller — a sponsor rebalancing a model, arriving in one block, against an insurance and bank bid that turns up on yield rather than on calendar. Muni liquidity is now partly a function of other firms' model committees, and unlike an SMA book that decision is visible in advance through creation and redemption activity and published model changes, which makes ETF primary flow a data feed worth capturing rather than market colour worth reading.*

[The Bond Buyer](https://www.google.com/url?q=https://www.bondbuyer.com/news/short-end-munis-face-correction-belly-long-end-see-gains&source=gmail&ust=1789856581444000&sa=E) · [Bloomberg](https://www.google.com/url?q=https://finance.yahoo.com/markets/options/articles/bond-rout-spurs-record-outflow-152422493.html&source=gmail&ust=1789856581444000&sa=E) · [The Bond Buyer](https://www.google.com/url?q=https://www.bondbuyer.com/news/rate-volatility-municipal-market-selloff-attracting-crossover-buyers&source=gmail&ust=1789856581444000&sa=E) · [The Bond Buyer](https://www.google.com/url?q=https://www.bondbuyer.com/news/muni-mutual-funds-see-daily-outflows&source=gmail&ust=1789856581444000&sa=E)

## JO Hambro outsources its desk as outsourcing plans double

J O Hambro Capital Management, which runs £16.8 billion, appointed Northern Trust on 14 September as its sole outsourced trading provider across equities, fixed income and exchange-traded derivatives, on a 24/6 basis with middle- and back-office support attached; JOHCM's own traders were invited to move across to Northern Trust. COO Clare Forster cited "scalable global trading infrastructure, greater operational resilience and access to extensive liquidity and broker networks." The pattern behind the decision has numbers on it: Northern Trust's spring 2026 InvestOps survey of 300 chief executives, CIOs and operations heads found managers planning to outsource non-core activities more than doubled from 18% in 2024 to 39%, with 42% naming outsourcing as a cost-control measure and 69% naming offshoring; over the same period the share prioritising product expansion fell from 60% to 47% while the share cutting products rose from 5% to 28%.

*Demand is rising on cost while dealer-sponsored supply thins — Jefferies wound down its own outsourced fixed income desk roughly ten months after launching it, as the 11 September edition noted — which concentrates the business with the custodians and hands them the pricing power on renewal. The explicit saving is headcount and an EMS licence and it models cleanly; the cost nobody quotes is that execution data leaves with the desk, so unless the contract specifies raw fill-level data returned in a usable schema, research and portfolio construction lose the ability to test implementation shortfall against their own flow, and the exit cost is rebuilding a desk from nothing.*

[Northern Trust](https://www.google.com/url?q=https://www.stocktitan.net/news/NTRS/j-o-hambro-capital-management-selects-northern-trust-as-sole-qcva0xt1lxp0.html&source=gmail&ust=1789856581444000&sa=E) · [Asset Servicing Times](https://www.google.com/url?q=https://www.assetservicingtimes.com/assetservicesnews/industryarticle.php?article%5Fid%3D18329&source=gmail&ust=1789856581444000&sa=E) · [Northern Trust / InvestOps](https://www.google.com/url?q=https://www.stocktitan.net/news/NTRS/northern-trust-survey-asset-managers-sharpen-focus-on-core-0lhtzhy9411j.html&source=gmail&ust=1789856581444000&sa=E)

## Credit futures grow fast and stay tiny beside CDS

August figures compiled this week put Cboe's dollar credit futures at $407 million average daily volume, up 40% year on year, with month-end open interest of $2.17 billion; CME at $253 million ADV, up 27%, on average daily open interest of $1.61 billion against $472 million a year earlier, with the duration-hedged investment grade contract about 60% of volume and twenty-three to twenty-four large open-interest holders; and Eurex at €3.44 billion of open interest, 55% above a year earlier, its high-yield FEHY contract at €1.30 billion or nearly three times August 2025, across 700,000 contracts and 110-plus active end users in the first half. Set against that, gross credit swap notional outstanding stood at $7.17 trillion on 28 August, of which $4.81 trillion was cleared, and North American index products alone traded $222.9 billion in that single week.

*Listed credit futures reference cash-bond indices and therefore carry rates as well as spread, which is a closer basis for hedging an actual bond book than CDX's 125 equally weighted names, and they margin alongside existing futures positions with no bilateral CSA — a documentation and collateral cost that never appears in a spread-versus-spread comparison. At roughly $660 million a day across CME and Cboe against a weekday-equivalent $44.6 billion in North American CDS, though, the growth rate is the wrong number to look at: the capacity supports tactical beta and margin efficiency rather than portfolio-level risk transfer, and whether twenty-odd large open-interest holders at CME becomes two hundred is what decides if that ever changes.*

[The DESK](https://www.google.com/url?q=https://www.fi-desk.com/credit-futures-show-steady-growth-under-shadow-of-cds/&source=gmail&ust=1789856581445000&sa=E) · [Eurex](https://www.google.com/url?q=https://www.eurex.com/ex-en/find/news-center/news/credit-index-futures-market-review-h1-26-5374818&source=gmail&ust=1789856581445000&sa=E)