Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending October 24, 2025.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
10/28/25 9:00	FHFA House Price Index MoM	Aug	--	-0.10%
10/28/25 9:00	S&P Cotality CS 20-City MoM SA	Aug	--	-0.07%
10/28/25 10:00	Conf. Board Consumer Confidence	Oct	93.80	94.20
10/29/25 7:00	MBA Mortgage Applications	24-Oct	--	-0.30%
10/29/25 8:30	Advance Goods Trade Balance	Sep	-$90.00b	-$85.50b
10/29/25 10:00	Pending Home Sales MoM	Sep	--	4.00%
10/30/25 8:30	Initial Jobless Claims	25-Oct	--	--
10/30/25 8:30	GDP Annualized QoQ	3Q A	3.00%	3.80%
10/31/25 8:30	Personal Income	Sep	0.40%	0.40%
10/31/25 8:30	Personal Spending	Sep	0.40%	0.60%

With the ongoing federal government shutdown, the economic data flow remains both lighter and more second-tier in nature, and the sparse data has generally led to both lower market volumes and volatility. A Philadelphia Fed-region services industry report was decidedly weak, but was offset by a somewhat improved Existing Home Sales report that posted the biggest gain since February. In some ways, the rates market marked time this past week until the eagerly-awaited Consumer Price Index (CPI) report was released just before this Weekly Update goes to press. This CPI report was a special release, as it was needed to ensure that the Social Security Administration could meet its deadline for calculating cost-of-living adjustments. The report will likely be dissected for accuracy, and, unless well-above expectations, is not expected to dissuade the Fed from a likely rate cut at the upcoming week’s FOMC meeting. The upcoming week offers a plethora of diverse data, although many of the reports are likely to be delayed. 

S&P Cotality CS 20-City MoM: The S&P Cotality (formerly CoreLogic) 20-City price index for August is expected to show a slightly larger month-over-month decrease of -.2% vs. July’s -.07%.

FHFA House Price Index MoM: The FHFA price index for August is expected to reveal a slightly larger month-over-month decrease of .2% vs. July’s .1% decrease.

Conference Board Consumer Confidence: Owing to affordability and job market concerns, the sentiment gauge for October is expected to reveal a slight pullback from September’s.

Mortgage Bankers Association (MBA) Mortgage Applications: Lower prevailing rates may lead to a rise in activity, as occurred last month, but activity has subsided in recent weeks.

Pending Home Sales:  August sales posted a 4% month-over-month rise, but September is expected to post a decrease of .4%.

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

GDP Annualized QoQ (Advance):  Subject to shutdown - Annualized GDP for Q3 was expected to land around 3.0%.  

Personal Income & Spending: Subject to shutdown – September income is expected to post a similar gain to the prior month, while spending is expected to weaken a tad. This report also includes the Personal Consumption Expenditure figures, an important barometer of inflation, but this data will also be subject to delay. 

Employment Cost Index: Subject to shutdown – It was expected to post a .9% rise for Q3.

Federal Reserve Bank Appearances:

• 10/18/2025-10/28/2025 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	10/30
13-Week; 26-Week	86 Bln; 77 Bln	10/27
6-Week	95 Bln	10/28
52-Week	50 Bln	10/28
Notes	Offering Amount	Auction Date
2-Year; 5-Year	69 Bln; 70 Bln	10/27
7-Year	44 Bln	10/28
FRNs	Offering Amount	Auction Date
2-Year	30 Bln	10/29

Key Market Trends

Sources: Bureau of Labor Statistics via FRED; Federal Reserve Bank of St. Louis. A leading indicator of a less dynamic labor market is the trend in longer-term unemployed workers. As can be seen here, this trend has been a rising one in the last six months. While the latest data for September has been delayed, multiple other job market-related reports from private sources in the past month have indicated that this trend is likely ongoing. Given that the Fed has noted that risks appear tilted to the employment side of their dual mandate, this trend is a reason for the market’s expectation of another 25-bps rate cut at the upcoming FOMC.

Source: Bloomberg. As can be seen here, the yield curve (1-month Fed Funds Effective forwards) prices a near-certain 25-bps cut by the Fed on October 29th, owing to the above-noted labor market backdrop. Moreover, the government shutdown may impair near-term economic conditions and thereby potentially add further fuel for a “risk management” policy ease. For members who are in a liability-sensitive balance sheet position, it can be an opportune time to consider terming out some funding, as the market has already priced a notable easing cycle into the curve. Indeed, the market’s cycle end-point rate is ~2.875%, well below the Fed’s September “dot plot” and ~124 bps lower (equivalent of five 25-bps cuts) than the current fed funds.

Source: Bloomberg. A potential highlight of the impending FOMC could relate to the Fed’s asset portfolio (System Open Market Account, or “SOMA”), which is currently in runoff, aka Quantitative Tightening, mode. This process essentially removes liquidity from the financial system, since the Fed is not reinvesting principal payments on its holdings. Here can be seen the portfolio runoff, in the wake of the pandemic-era runup, of the past few years. Back in April, the Fed reduced the monthly runoff cap on USTs from $25 to $5bn but kept the cap for Agency and Agency MBS at $35bn. With the MBS caps rarely being reached, these caps are not particularly high. However, recent pressures in the short-term financing and funding markets, as seen here in the elevated SOFR-to-Fed Funds spread, may spur the Fed to announce or telegraph a full end to QT. Moreover, the Fed’s Standing Repo Facility, as we covered last week, again experienced demand this week at its 4.25% offering rate. Chair Powell recently stated that the Fed “may end runoff in the coming months”, and many strategists expect a firm announcement at least by December’s FOMC. An end to runoff is unlikely to provide game-changing help on funding pressures, as the current monthly runoff pace of ~$20bn is small relative to the sizes of short-term money market flows. But an end to the runoff will at least remove a source of liquidity drainage from the system.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was higher and flatter from the week prior, with the 2, 5, and 10-year higher by ~7, 6 and 2 bps. The market traded in a tight range, awaiting the Friday CPI report for further guidance. As of Thursday afternoon, the market priced end-2025 Fed Funds at 3.64%, or 5 bps higher than a week ago, which equates to just shy of two 25-bps rate cuts before yearend. The market’s end-2026 forward is ~2.90%, or 7 bps higher than a week ago. The chance of a rate cut on October 29th is at ~95%, down slightly from 96% last week.

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday, short-end rates were lower by 13 to 17 bps in a curve steepening shift vs. the week prior. Advance maturities have moved further into the timeline of the Fed’s projected rate cuts, which thereby causes part of the decline. Improvement in some of our issuance levels also helped our advance offering levels, but positive net T-bill issuance and upward pressure on short-end financing rates and SOFR, as covered in our recent editions, persist and continue to inject volatility into the shortest advance tenors. In this regard, the prevailing and relatively elevated SOFR-to-Fed Funds spread appears likely to persist in the near-term, especially with the upcoming $58bn total net new cash of 2/5/7-year UST auctions all settling on the 31st.
• The FOMC outcome should clearly be the highlight of the upcoming week. The markets will monitor announcements regarding a shutdown resolution and the 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 higher and flatter vs. the week prior. The 2, 5, and 10-year rose by 8, 7, and 4 bps. 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 slate of 2/5/7-year auctions. Note that UST auctions usually occur at 1pm and can occasionally spur volatility around that time. Please contact the Member Service Desk for further information on market dynamics, rate levels, or products.