Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending January 9, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
1/13/26 8:30	CPI MoM	Dec	0.30%	--
1/13/26 10:00	New Home Sales	Oct	705k	--
1/14/26 8:30	PPI Final Demand MoM	Nov	0.20%	--
1/14/26 8:30	Retail Sales Advance MoM	Nov	0.40%	0.00%
1/14/26 10:00	Existing Home Sales	Dec	4.22m	4.13m
1/15/26 8:30	Initial Jobless Claims	10-Jan	--	208k
1/15/26 8:30	Continuing Claims	3-Jan	--	1,914k
1/16/26 8:30	New York Fed Services Business Activity	Jan	--	-20.00
1/16/26 9:15	Industrial Production MoM	Dec	0.20%	0.20%
1/16/26 9:15	Capacity Utilization	Dec	76.00%	76.00%

The past week offered a series of labor market releases which generally reflected a less dynamic yet relatively stable jobs market. The end-of-week employment situation report, released after our update went to press, will cap off the data deluge and be the likely highlight. Another potential end-of-week highlight could be a Supreme Court decision on the International Emergency Economic Powers Act (IEEPA) tariffs. If declared illegal, market strategists cite the potential for a rise in long-term yields and a curve steepening move, as tariff reimbursements could act as a stimulus. But reaction may be limited, since tariffs could potentially be reimposed via alternative authorities. Other data this past week reflected ongoing manufacturing sector weakness but somewhat firmer services sector activity, as we review herein. The upcoming week will shift attention to the inflation-side of the Fed’s mandate, with Tuesday’s Consumer Price report likely to be the highlight two weeks before the January 28th FOMC outcome.

Consumer Prices Index (CPI): The report is expected to post a .3% M-o-M rise on both the headline and core measures for December, with the Y-o-Y increases at 2.7% on both. If realized, this outcome would reveal that inflation is still not clearly nearing the Fed’s stated 2% goal.

New Home Sales: The delayed data for October will be released by the Census Bureau and provide an updated status, albeit stale, on this housing market data point.

Producer Price Index (PPI): A complement to the CPI report, this release may provide further context on inflation. However, being November data and somewhat stale, this report should pale in market significance to the CPI release.

Retail Sales: While helpful to assess consumer behavior, this release is yet another delayed report from the Census Bureau for November. Judging from alternative/private and timelier data on this sector, sales and spending appear to be holding up relatively well owing to the strength of wealthier consumer cohorts.

Existing Home Sales: The December reading is expected to post a 2.4% M-o-M gain which would improve upon the prior .5% increase.

Initial & Continuing Jobless Claims: Claims have generally stabilized within a relatively non-worrisome range, but Continuing Claims remain in elevated territory, symbolic of a less fluid jobs market.

NY Fed Business Services Activity Report: The monthly survey of service firms in NY State, northern NJ, and Southwestern CT is highly unlikely to be a market-mover, but it will provide an update on business conditions and sentiment within the geographical footprint of the FHLB-NY district.

Industrial Production & Capacity Utilization: The Production index is expected to post another .2% rise for December. The reports will provide an update on conditions in the key component sectors of manufacturing, mining, and utilities.

NAHB/Wells Fargo Housing Market Index: To be released on the 16th, the National Association of Homebuilders/Wells Fargo index will provide fresh insight on the single-family housing market.

Federal Reserve Bank Member Appearances:

• 1/12/2026 18:00  NY Fed President Williams Delivers Keynote Remarks at Council of Foreign Relations’ International Economics event.
• 1/14/2026 14:10  NY Fed President Willliams delivers opening remarks at NY Fed’s “An Economy That Works for All” event.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	80 Bln; 80 Bln	1/15 -- 1/20
13-Week; 26-Week	86 Bln; 77 Bln	1/12 -- 1/15
6-Week	75 Bln	1/13 -- 1/15
Notes	Offering Amount	Auction Date -- Settle Date
3-Year	58 Bln	1/12 -- 1/15
9-Year 10-Month	39 Bln	1/12 -- 1/15
Bonds	Offering Amount	Auction Date -- Settle Date
29-Year 10-Month	22 Bln	1/13 -- 1/15

Key Market Trends

Sources: Bloomberg; Institute for Supply Management (ISM). The ISM released its widely-followed business surveys this past week, and the results portrayed an ongoing divergence between the manufacturing and services sectors. As seen here, with sub-50 readings signaling contraction and above-50 signaling expansion, the manufacturing sector is the laggard. Indeed, the manufacturing index posted its lowest reading, at 47.9, in over a year and has been in contraction territory for ten straight months. New orders and production moved lower, employment remained in the contraction zone, and materials costs remained elevated. The upcoming week’s Industrial Production & Capacity Utilization reports will provide further illumination on actual activity in the sector. While the manufacturing sector has been challenged by economic uncertainty and tariffs, some economists cite new federal tax provisions on capital investment as a potential source of relief this year. The ISM-Services index, meanwhile, at 54.4, beat consensus expectations and displayed improvements in new orders and employment. Given services’ larger share of the economy, this news was positive for the overall growth picture.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was modestly changed from both one and three weeks ago. Since our last edition, most tenors are higher by two to four bps. The lack of movement in rates has been consistent over the past few weeks. While that is often expected during holiday weeks, the range-trading theme has persisted into this first week of the year. Providing a bit of upward pressure on yields was corporate bond issuance which exploded out of the gate to post the highest issuance totals to begin a year since 2020. As of Thursday afternoon, the market priced the chance of a 25-bps January Fed ease at ~11%, a tad lower than three weeks ago. The market’s end-2026 forward is ~3.08%, or 6 bps higher than three weeks ago and which equates to just shy of 2.5 25-bps rate cuts for the year.

Source: Bloomberg. After the dust settled, yearend market pressures proved to be a bit more bark than bite. While the market had priced the “over-the-turn” SOFR forward at ~4.05% leading into it, the actual realized SOFR at yearend was 3.87%. The Fed’s MBS reinvestment and Reserve Management Purchase (RMP) programs’ purchase of T-bills, in combination with negative net T-bill supply over the past month, aided cash market liquidity conditions. Also, as seen here, record-high Money Market Fund (MMF) AUM have been a welcome absorbent of short-end paper and repo market demand. Meanwhile, also seen here, the Fed’s Standing Repo Program posted a notable increase at yearend and absorbed demand for funds. These dynamics conspired to quell a more severe spike in SOFR and, in turn, our Overnight rates, at yearend.

Source: Bloomberg. With rates mired in a tight range over the past month, both delivered volatility and implied volatility (“vol”) in options have descended to multi-year lows. As seen here, medium-tenor implied vol has hit the lowest levels in four years. Given that mortgages contain an option component, this decline in vol has benefited MBS spreads. As seen here, MBS spreads have tightened to levels last seen in early to mid-2022. Note that the decline in vol benefits, all else equal, pricing on our advance products with embedded option protection such as caps/floors and the callable advance. The lower vol, however, negatively impacts pricing of putable advances.

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and vs. three weeks ago, our short-end rates were mostly lower to varying degrees. The shorter tenors posted the bigger declines, with 1-month lower by 7 bps. The 3-month declined by 4 bps, and 6-month was unchanged. Overnight popped higher at year end, albeit not as much as initially feared, and it is now roughly the same as three weeks ago. Pressures in the short-term financing markets have eased greatly since the tumultuous end of November, best evidenced by SOFR normalizing to other rates such as Fed Funds. Net T-bill issuance is projected to remain negative into mid-January, and the Fed began its MBS portfolio principal reinvestments into T-bills on December 1st. Further decreasing net T-bill supply to the market has been the Fed’s new Reserve Management Purchases program which is buying T-bills over the next few months. Money Market Fund AUM, meanwhile, remains near record high levels and has absorbed T-bills and benefited our FHLB issuance levels. These dynamics have all helped to alleviate short-end funding stress and upward pressure on SOFR and our advance rates.
• The markets will closely assess the inflation data due this upcoming week, while also monitoring any Supreme Court decision on tariffs. A strike-down of tariffs could potentially add upside risk to net T-bill issuance, assuming tariff revenues needed to be refunded.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was higher by 3 to 7 bps from three weeks ago. The 4- to 7-year zone led the move. 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, each of which will settle January 15th. 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.