Local governments are spending big to mop up after hacks and prevent new ones. That means peril—and opportunity—for the investors who buy their bonds. Hacks are on the rise across all industries, but the public sector’s weak protections make it an increasingly attractive target for cybercriminals. Cybercrime has left schools, hospitals and utilities from Baltimore to Los Angeles struggling to pay ransom, restore services and boost security. Finances have suffered, threatening credit ratings. The number of K-12 public schools suffering ransomware attacks almost doubled between 2021 and 2022 to almost 2,000 a year, according to a report by Emsisoft, a cybersecurity company. The [...]

Investors are betting against the Fed—twice over. The first bet is the sudden turn from expecting the Federal Reserve to keep rates higher for longer to instead expecting rapid and deep cuts next year. The second bet is almost the exact opposite, that the Fed will have to keep rates much higher in the long run than it says it will. Treasury yields have come down, but at around 4.1% the 10-year yield remains more than 1.5 percentage points above the Fed’s forecast of long-run interest rates. Both bets go against the popular market dictum: Never fight the Fed. Yet, there are good reasons [...]