The past two weeks’ economic reports have generally reflected weak “soft”, or survey-oriented, data. The poor sentiment was most clearly evidenced in last week’s record low University of Michigan Consumer Sentiment reading for May. Meanwhile, “hard” data, or readings of actual aggregate activity, have been relatively steady and occasionally have bested expectations. Inflation data has proven concerning and seemingly cemented, for now, the “on hold” posture for the Fed. The Mideast situation remains fluid, and any meaningful developments could move the rates market. Indeed, the past week’s news of a potential resolution framework, or prospects of a memorandum of understanding on a framework, led to a decline in oil prices and yields. Looking forward to next week, the data slate is heavy on labor market-related releases, with the monthly jobs report the likely highlight.

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…