This MSD Weekly Market Update reflects information for the week ending October 3, 2025.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS 
Date Time Event Period Survey  Prior
10/7/25 8:30 Trade Balance Aug -$61.4b -$78.3b
10/7/25 11:00 NY Fed 1-Yr Inflation Expectations Sep      -- 3.20%
10/7/25 15:00 Consumer Credit Aug $15.000b $16.010b
10/8/25 7:00 MBA Mortgage Applications 3-Oct      -- -12.70%
10/8/25 14:00 FOMC Meeting Minutes 17-Sep      --      --
10/9/25 8:30 Initial Jobless Claims 4-Oct      --      --
10/9/25 8:30 Initial Claims 4-Wk Moving Avg 4-Oct      --      --
10/9/25 8:30 Continuing Claims 27-Sep      --      --
10/10/25 10:00 U. of Mich. Sentiment Oct P      -- 55.10
10/10/25 14:00 Federal Budget Balance Sep      -- -$344.8b

The main event of the past week has been the still-ongoing, as of this writing, federal government shutdown. All in all, the markets thus far have remained calm in response to it and await further news. There could certainly be negative economic impacts in the short-term; in past episodes, the negative impacts were reversed in subsequent quarters once workers returned and back paychecks were received and spent. From the Fed’s perspective, the shutdown comes at an inopportune juncture, given that the October 29th FOMC is “live”, and so the Fed ideally would need fresh data to determine its rate policy. This week’s initial claims and employment situation reports have been delayed due to the shutdown. Other reports released during the week portrayed a softening labor market and a continued cool manufacturing sector. 

The upcoming week is relatively light on data. However, depending on the government shutdown status, there could be a release of previously delayed reports.

Trade Balance: The deficit is expected to reveal a narrowing in August to -$61.4bn from the prior -$78.3bn.

NY Fed 1-Yr Inflation Expectation:  The prior reading was 3.20% for August, and the September figure will be monitored as a consumer inflation sentiment barometer. 

Consumer Credit:  Consumer Credit is expected to decrease to $15bn from the previous $16bn.

MBA Mortgage Applications:  After increasing notably in prior weeks, the past week posted a decrease of 12.70%, as rates had ticked back up over the period.

Initial and Continuing Jobless Claims: Data this past week was delayed due to the federal government shutdown. Markets will monitor potential releases of batch data post any shutdown resolution.

University of Michigan Sentiment: The previous release was 55.1. Economists will examine the various components of this consumer barometer in this preliminary edition for October.

Federal Reserve Bank Appearances:

  • 10/03/2025 13:40  Fed's Jefferson Speaks on Economic Outlook at Drexel Economic Forum
  • 10/07/2025 10:00  Fed's Bostic Speaks at Fisk University in Nashville
  • 10/07/2025 11:30  Fed's Kashkari Speaks at Star Tribune Summit
  • 10/08/2025 9:30  Fed's Barr Keynote at Community Banking Research Conference
  • 10/08/2025 14:00  FOMC Meeting Minutes – The Minutes may shed additional light on FOMC members’ stances regarding future rate cuts.
  • 10/08/2025 15:15  Fed's Kashkari Speaks at Center for Indian Country Development
  • 10/10/2025 9:45  Fed's Goolsbee Gives Opening Remarks at Conference
UPCOMING WEEK'S US TREASURY AUCTIONS
Bills Offering Amount Auction Date
4-Week; 8-Week 105 Bln; 90 Bln 10/2
13-Week; 26-Week 84 Bln; 75 Bln 10/6
6-Week 90 Bln 10/7
     
Notes Offering Amount Auction Date
3-Year 58 Bln 10/7
9-Year 10-Month 39 Bln 10/8
Bonds Offering Amount Auction Date
29-Year 10-Month 22 Bln 10/9
     

   

Key Market Trends

Key Market Trends Chart 1

Sources: Bloomberg; Bureau of Labor Statistics (BLS); Conference Board (CB). Given the shutdown-related absence of this Friday’s influential jobs report, the market this past week resorted to assessing a few second-tier reports for an updated portrait of the labor markets. The portrait continues to portray a limited hiring-limited layoffs climate. As seen here, the BLS’ latest JOLTS (Job Openings & Labor Turnover Survey) report Quits Rate, a measure of worker confidence in finding a new job and overall job market fluidity, fell in August to near the lows of the last few years. Meanwhile, the latest (September) Conference Board Consumer Confidence Labor Differential, a sentiment reading of “jobs plentiful less jobs hard to get”, posted the lowest level in four years. Lastly, ADP private sector payrolls posted a net negative change of 32K for September. While the ADP provides a relatively narrow view of the jobs market and is often maligned by economists for its inaccuracy in predicting the BLS’ nonfarm payrolls figure, it nonetheless has a decent track record of revealing a general trend and prompted a modest decline in yields this past Wednesday.

 

Key Market Trends Chart 2

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was lower from the week prior, with the 1- to 3-year zone leading the move. The 2-year fell ~13 bps, as the market priced a more aggressive rate-cut timeline into curve. The catalysts for the repricing were the relatively cool economic data as well as potential impacts and uncertainty from the government shutdown. As of Thursday afternoon, the market priced end-2025 Fed Funds at 3.63%, or 8 bps lower than a week ago and which equates to ~1.8 25-bps rate cuts before year-end. The market’s end-2026 forward is ~2.955%, or 12 bps lower than a week ago. The chance of a cut on October 29th is at ~92%.

Key Market Trends Chart 3

Source: Bloomberg. Shown here is a visual summary of a topic we have mentioned often herein, namely the US Treasury’s rebuild of its General Account (TGA). Earlier in 2025, owing to the debt ceiling, the TGA declined and liquidity in the financial system, portrayed here as bank reserves plus the Fed’s Reverse Repurchase Program balances, rose. And, given the debt ceiling constraint, T-bill issuance was net-negative during this period.  After the debt ceiling resolution in July, the situation reversed, with heavy net-positive T-bill issuance to rebuild the TGA and a consequent drain of liquidity from the system. The process led to short-term financing market pressures most clearly seen in relatively elevated SOFR settings, especially around UST settlement and tax dates. At this juncture, given an ~$850bn target, the TGA has essentially reached its goal, and so the related impacts could moderate in the months ahead or until late December when balance sheet management dynamics take hold.

Key Market Trends Chart 4

Source: JP Morgan; US Treasury. With the TGA largely rebuilt, there should be less need for raising cash via T-bill issuance. Here can be seen the dramatic turn to net-positive issuance ($bn) post the early-July debt ceiling resolution. But net issuance has tapered off in recent weeks, with the mid-September corporate tax date providing help to decrease issuance needs. As can be seen here in the gray bars, JP Morgan strategists forecast a much milder net issuance pattern in the next few months.

FHLBNY Advance Rates Observations

Front-End Rates

  • As of midday Thursday, short-end rates were mixed and the curve flatter vs. the week prior. Overnight was 12 bps higher, as it was impacted by the usual dynamics in the financing markets related to quarter-end and UST auction settlements on September 30th, which pushed SOFR higher. The 1-week to 3-month sector was 2 to 6 bps higher, led by the shorter tenors, as our issuance spreads widened a touch from the week prior. The 5- and 6-month tenors, meanwhile, managed to dip by two bps on the market’s more aggressive pricing of projected rate cuts. Money Market Fund AUM remains robust and has grown organically via reinvested interest payments and thereby provided support for our paper. Net T-bill issuance should moderate over the coming weeks, as the bulk of the heavy net issuance of the past few months is likely in the rearview mirror now that Treasury has significantly rebuilt its General Account.
  • The week ahead is relatively light on scheduled data, but markets will be on guard for announcements regarding government-shutdown delayed data releases.

Term Rates

  • The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was lower and steeper from a week ago. The 2-year declined by 15 bps, the 5-year by 10 bps and the 10-year by 9 bps. Kindly refer to the previous section for color on market dynamics and changes. 
  • On the UST term supply front, the upcoming week serves a slate of 3/10/30-year auctions. Note that UST auctions usually occur at 1 p.m. and can occasionally spur volatility around that time. Please contact the Member Services Desk for further information on market dynamics, rate levels, or products.

REMINDERS

 

2025 Small Business Recovery Grant Program: Starting September 15, 2025, the FHLBNY will offer $5 million in grant funding under the 2025 Small Business Recovery Grant (SBRG) Program. Through the SBRG Program, members will be able to provide grants of up to $10,000 to qualifying small businesses, including farms and non-profit organizations, that have faced economic challenges due to the rate environment, inflation, supply-chain constraints, and/or rising energy costs. Funding will be limited to $50,000 per member. Please contact the Member Services Desk to learn more and/or visit the SBRG Page.

Price Incentives for Advances Executed Before Noon: In effect as of Tuesday, September 5, 2023, the FHLBNY is pleased to now offer price incentives for advances executed before Noon each business day. These pricing incentives offer an opportunity to provide economic value to our members, while improving cash and liquidity management for the FHLBNY. For further details, kindly refer to the Bulletin.

Key Contacts

Relationship Managers
(212) 441-6700
FHLBNY@fhlbny.com

Member Services Desk
(212) 441-6600
MSD@fhlbny.com

Questions?

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