Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending October 17, 2025.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
10/20/25 10:00	Leading Index	Sep	-0.30%	-0.50%
10/23/25 8:30	Initial Jobless Claims	18-Oct	--	218k
10/23/25 8:30	Continuing Claims	11-Oct	--	--
10/23/25 10:00	Existing Home Sales	Sep	4.08m	4.00m
10/24/25 8:30	CPI MoM	Sep	0.40%	0.40%
10/24/25 8:30	Core CPI MoM	Sep	0.30%	0.30%
10/24/25 8:30	CPI YoY	Sep	3.10%	2.90%
10/24/25 9:45	S&P Global US Manufacturing PMI	Oct P	52.00	52.00
10/24/25 10:00	New Home Sales	Sep	710k	800k
10/24/25 10:00	U. of Mich. Sentiment	Oct F	55.00	55.00

With the ongoing federal government shutdown, the economic data flow has been both lighter and more second-tier in nature. The lack of data has generally led to both lower market volumes and volatility. The yield curve still prices a near-certain 25-bps cut by the Fed on October 29th, as recent private reports on labor market-related data has portrayed a decidedly less dynamic state, and the shutdown may impair near-term economic conditions. Given that the October 29th FOMC decision is “live”, the Fed would clearly desire fresh data. On that score, the upcoming week’s special release of the Consumer Price Index report for September will provide some needed insight on current conditions.

Leading Index: The Conference Board’s reading is expected to tick .2% higher from last month’s -.5% measure.

MBA Mortgage Applications: To be released 10/22 -- After a spike last month, led by refinancings, applications have moderated in subsequent weeks. The dip in rates over the last week, however, may provide a spark to activity, although the past week’s holiday may have suppressed activity.

Initial Jobless Claims: Subject to shutdown delay – data this past week was delayed.

Existing Home Sales: Sales are expected to reveal a slight increase over last month’s 4.00m figure.

Consumer Price Index (CPI) Report: CPI M-o-M is expected to be flat vs. August’s reading, indicating a rise in prices of .4%. Core CPI M-o-M is also expected to be flat to the month prior, with a rise of .3%.  CPI Y-o-Y is expected to be .2% higher over last month’s reading and thereby hit a level of 3.1%. Since the report is needed for the annual calculations of Social Security Cost-of-Living adjustments, the Bureau of Labor Statistics has announced this special release of the September data originally scheduled for release this past week.  

S&P Global PMI Report: The S&P Global Manufacturing PMI preliminary report is expected to ease to 52, in line with expectations, after August’s reading of 53. 

New Home Sales:  Sales are expected to reveal a slight pullback from last month’s 800K figure to ~710K.

University of Michigan Consumer Sentiment Report: The October Final reading is expected to be 55 which would be in line with the preliminary estimate.

Building Permits: To be released 10/24 but subject to shutdown delay – The data for September is projected to portray a small decrease from August’s 1,330K to 1,312K. This result would continue the downward trend since July.

Federal Reserve Bank Appearances:

• 10/17/2025 12:15  Fed's Musalem in Fireside Chat at IIF
• 10/18/2025-10/30/2025 Fed's External Communications Blackout before 10/29 FOMC decision

 

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date
4-Week; 8-Week	110 Bln; 95 Bln	10/23
13-Week; 26-Week	86 Bln; 77 Bln	10/20
6-Week	95 Bln	10/21
Notes	Offering Amount	Auction Date
No scheduled Note offerings.
Bonds/TIPs	Offering Amount	Auction Date
19-Year 10-Month	13 Bln	10/22
5-Year	26 Bln	10/23

Key Market Trends

Source: Bloomberg. This past week’s slate of economic reports, generally considered second-tier,  was a “mixed bag”, with a few worse and a few better than expectations. In an admittedly busy chart, various reports can be seen here. The National Federation of Independent Business (NFIB) Small Business index dipped to a 3-month low and reflected slightly less optimism as well as increased uncertainty and cost concerns. The New York Fed Business Leaders Survey diffusion index for the services industry posted its lowest reading since January 2021 and revealed a dip in employment.  On the manufacturing front, the Philadelphia Fed Survey diffusion index dropped markedly from the prior month’s reading. Countering that data, however, was the NY Fed Empire State Manufacturing diffusion index which surprised to the upside and revealed a moderate increase in activity and optimism. Lastly, the National Association of Homebuilders/Wells Fargo diffusion index jumped to a 6-month high, perhaps assisted by the recent decline in term rates.

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 belly of the curve leading the move via a drop of 17 to 19 bps. Almost half of the curve’s move occurred on Thursday afternoon and on minimal news other than the day’s weaker equity prices. The 2-year, at 3.42% as of this writing, marked its lowest level since September 2022. As of Thursday afternoon, the market priced end-2025 Fed Funds at 3.585%, or 7 bps lower than a week ago and which equates to just over two 25-bps rate cuts before yearend. The market’s end-2026 forward is ~2.83%, or 19 bps lower than a week ago. The chance of a cut on October 29th is at ~96%, up marginally from 88% last week.

 

Source: Bloomberg. Last week’s surprise announcement by Treasury of higher-than-expected T-bill auction sizes has led to upward pressure on short-term financing rates (SOFR fixings being the prime example) and a relative cheapening in T-Bill spreads. Also, relative to the hefty net positive Bill issuance of the summer which concentrated in short tenors, the new supply is more dispersed across the Bills curve. Shown here is the spread of the 3-month T-bill vs. the 3mo-SOFR swap (for clarity, the chart reflects the SOFR swap rate minus T-Bill yield, RHS, %). The Bill spread has notably widened in recent weeks and, in turn, has instigated spread widening in our paper. This dynamic has been a contributing factor to the moves in our short-term advance rates this past week. For further information on this topic and/or for rate updates, please call the desk.  

Source: Bloomberg. Shown here is the year-to-date trend in the Fed’s Standing Repo Facility (SRF). As a reminder, the SRF acts as a liquidity backstop to ensure financial institutions can obtain short-term funding if needed and thereby help policy implementation and keep overnight interest rates stable. The current SRF rate is 4.25%. Usage has been minimal, except on specific dates. But usage this week has jumped a few days in a row, indicative of the upward pressure on financing rates from higher T-Bill and UST auction settlements. Given that SOFR fixed at 4.29% on Thursday morning (reflecting Wednesday’s activity) and that SRF usage jumped again on Thursday morning, it appears that the elevated financing rates are persisting and that the SRF’s 4.25% level has become an attractive alternative for now.

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday, short-end rates were higher, markedly so in the shortest tenors, vs. the week prior and even though maturities have moved further into the timeline of the Fed’s projected rate cut on October 29th. The 1-month-and-in sector was 4 to 25 bps higher, led by Overnight and the shortest tenors. The 2- to 5-month sector was higher by 4 to 5 bps, and the 6-month rose by a bp. While net T-bill issuance had moderated from summer levels, Treasury last week announced a surprise increase in auction amounts which has led to upward pressure on short-end financing rates. For example, the SOFR fixing on Thursday morning was 4.29% after having resided in the 4.12 to 4.15% zone last week. In this light, the prevailing and relatively elevated SOFR-to-Fed Funds spread appears likely to persist in the near-term. Moreover, T-Bill spreads have widened and, in turn, impacted levels on our paper.
• The CPI report may be the data highlight of the upcoming week. The markets will monitor announcements regarding a shutdown resolution and eventual release of other delayed reports.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was notably lower from a week ago. The 2- to 10-year sector declined by 17 to 19 bps. The drop in yields spurred some renewed term advance interest. Given the degree of Fed cuts now priced into the curve, locking into a term advance can be sensible for those with liability sensitive balance sheets. Kindly refer to the previous section for color on market dynamics and changes. 
• On the UST term supply front, the upcoming week serves a 20-year nominal and a 5-year TIPS auction. Note that UST auctions usually occur at 1pm and can occasionally spur volatility around that time. Please contact the Member Services Desk for further information on market dynamics, rate levels, or products.