The past week’s economic reports were mixed and overshadowed by the FOMC outcome. A set of housing reports sent somewhat contradictory signals, as housing starts were weak but pending home sales registered a solid improvement. Retail sales revealed that consumers were “hanging in” but likely draining savings to do so. The market treated the FOMC as a hawkish surprise, and rates pushed higher in response. The last sentence of the streamlined FOMC statement captured the tone of the outcome and market’s reaction: “The Committee will deliver price stability.” Indeed, new Fed President Warsh seemingly sought to portray independence and inflation-fighting credibility. The fresh “dot plot”, meanwhile, revealed a skew towards rate hikes. The Mideast conflict appears to have reached a resolution, and this development likely helped to contain a further breakout higher in rates.

Back by popular demand, Frank Farone, Managing Director of Darling Consulting Group, returns to join us once again for an informative session focused on Liquidity and Asset/Liability Management. Frank will address key challenges and provide actionable strategies to help FHLBNY members stay resilient and take advantage of the new rate environment now and in the months/years to come.

We are now experiencing a “higher for longer” phase in the interest-rate cycle, accompanied by an inversion in the short-to medium terms followed by a steepening (see following chart). The Fed is still in a restrictive posture, but market expectations indicate a near-term easing, however, uncertainty surrounding the potential of future heightened growth leading to elevated inflation is causing steepening at the longer-end of the curve…