Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending January 23, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
1/27/26 8:15	ADP Weekly Employment Change	3-Jan	--	8.000k
1/27/26 9:00	FHFA House Price Index MoM	Nov	--	0.40%
1/27/26 9:00	S&P Cotality CS 20-City MoM SA	Nov	--	0.32%
1/27/26 10:00	Richmond Fed Manufact. Index	Jan	--	-7.00
1/27/26 10:00	Conf. Board Consumer Confidence	Jan	90.10	89.10
1/28/26 7:00	MBA Mortgage Applications	23-Jan	--	14.10%
1/29/26 8:30	Initial Jobless Claims	24-Jan	--	--
1/29/26 8:30	Continuing Claims	17-Jan	--	--
1/29/26 10:00	Factory Orders	Nov	--	-1.30%
1/30/26 8:30	PPI Final Demand MoM	Dec	0.20%	0.20%

Although subdued as of this writing, the past week experienced a bout of volatility, mostly owing to renewed tariff-related tensions. The 10-year UST, at 4.26% midday Thursday, finally broke out of its 4.00 to 4.20% range of the past three months. Economic releases, including inflation datasets, of the past week mostly met or were slightly stronger to expectations and have likely solidified a pause, after three successive 25-bps cuts, by the Fed at the looming January 28th FOMC meeting. The coming week’s slate of data is generally second-tier, in terms of usual market impact. The Supreme Court decision on the International Emergency Economic Powers Act (IEEPA) tariffs, meanwhile, has been pushed out until late February at the earliest. 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 muted, since many tariffs could potentially be reimposed via alternative authorities.

ADP Weekly Employment Change: This barometer, a 4-week moving average of private payrolls, has moved sideways in recent weeks. The past week posted an 8K gain which followed an 11.75K gain.

FHFA House Price Index: Following a .4% prior gain, this release will provide a snapshot for November.

S&P Cotality Case-Shiller Home Price Index: Following small gains in October, with the national index registering a 1.36% Y-o-Y increase, the report will provide an update for November.

Richmond Fed Index: This survey update on manufacturing and business conditions, while not a market-mover, will represent January and at least provide a snapshot on current sentiment.

Conference Board Report: The report will post updates on the Consumer Confidence, Present Situation, and Expectations indices for January. Confidence dropped by 3.8 bps last month, and economists expect a partial rebound of 1 point for this month. 

MBA Mortgage Applications: This barometer has staged two successive bounces higher in the past two weeks, with the overall index posting a 14.1% gain following a 28.5% gain the week prior. Lower rates have sparked renewed activity to start the year.

Initial & Continuing Jobless Claims: Claims have stabilized within a non-worrisome range, with the past week posting a 9K drop from the week prior. Continuing Claims remain elevated and symbolic of a less dynamic labor market, but they managed to register a second consecutive decline, 13K, this past week.

Factory Orders: After a 1.3% dip in October, the Census Bureau will release data for November which will provide a gauge of manufacturing and factory shipments and activity.

Producer Price Index: After a .2% M-o-M gain in November, market consensus is for a similar increase in December on the headline. The core is also expected to rise by .2%. Y-o-Y measures are expected to register at 3%. For context, the Fed’s stated inflation goal remains at 2%.

Federal Reserve Bank Member Appearances:

• 1/26/2026 – 1/28/26  Fed remains in blackout mode until the January 28th 2pm FOMC decision and statement.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	105 Bln; 95 Bln	1/29 -- 2/3
13-Week; 26-Week	89 Bln; 77 Bln	1/26 -- 1/29
6-Week	90 Bln	1/27 -- 1/29
Notes	Offering Amount	Auction Date -- Settle Date
2-Year; 5-Year	69 Bln; 70 Bln	1/26 -- 2/2; 1/27 -- 2/2
7-Year	44 Bln	1/26 -- 2/2
FRNs	Offering Amount	Auction Date -- Settle Date
2-Year	30 Bln	1/28 -- 2/2

 

Key Market Trends

Source: FHLBNY. The Fed is widely expected to hold rates unchanged at the upcoming FOMC. In that regard and as of midday Thursday, in the past six weeks the market has pared and pushed back the timeline of its pricing of potential Fed rate cuts over the next two years. In the immediate aftermath of the December FOMC meeting, the market priced ~20% chance of a 25-bps rate cut at the January 28th FOMC meeting; current pricing is only ~2% chance. By yearend 2026, moreover, the market had priced for ~2.25 25-bps cuts; current pricing is ~1.7 cuts. Note that market pricing for yearend 2026 remains slightly below the Fed’s latest projection (“dot”) from the December dot plot. Also note that the forwards curve is still inverted through the 1-year point and relatively flat thereafter through the 5-year point. This condition, in tandem with low implied volatility levels in options which we have covered in recent editions, can make for an opportune juncture to purchase interest rate cap protection. Please call us to learn more about our embedded-cap advance products.

Source: Bloomberg. The past week offered some disparate data on the housing market. As seen here, the National Association of Realtors Pending Home Sales index posted a 9.34% M-o-M decline in December, the largest monthly decline since early-2020 at the onset of the pandemic. The decline was well below expectations and was broad-based across geographic regions. This index serves as a leading indicator for actual completed existing home sales, and so its drop indicates that the housing sector remains in a challenging environment. Note that the index is seasonally adjusted; nonetheless, perhaps the drop was influenced by typically tricky December behavior patterns and could show improvement in the next print. Meanwhile, this week’s Mortgage Banker Association (MBA) Purchase index registered at 194.1, a 5% W-o-W gain. The MBA mortgage indices have posted consecutive notable gains to begin the year, as lower rates and a deceleration in home prices have helped activity rebound from low levels in 2025. Since the MBA index represents through the 16th of this month, perhaps its gain reflects a hopeful sign for the next round of home sales data.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was modestly higher from a week ago. The 2-, 5-, and 10-year rose by ~6, 7 and 7 bps, respectively. Economic data tilted better than expectations, and inflation-related prints remained well above the Fed’s desired 2% target. Also providing a bit of upward pressure on yields was further corporate bond issuance which has been robust to begin the year. The market again trimmed the odds of a Fed ease this month and has pared expectations for 2026. As of Thursday afternoon, the market prices the chance of a 25-bps Fed ease next week at ~2%, or 2% lower than a week ago. The market’s end-2026 forward is ~3.22%, or 4 bps higher than a week ago and which equates to just shy of two 25-bps rate cuts for the year.

Source: FHLBNY. As seen here, the forward spreads between SOFR and Fed Funds have narrowed in the past six weeks. Although SOFR remains somewhat elevated to Fed Funds, it has become clear that multiple factors have contributed to an easing of pressures in financing markets and SOFR. Net T-bill supply was negative in December through mid-January. While the net supply has now turned positive again, the current T-bill purchases by the Fed’s Reserve Management Purchase program and MBS paydown reinvestments have both helped to quell the impact of supply. Meanwhile, Money Market Fund AUM has remained robust and helped liquidity conditions. And soon tax refunds and lower taxes owed for 2025 should help liquidity. The current forward SOFR over month-end was ~3.73% as of Thursday afternoon. This slightly elevated level may be a risk premium built into pricing. Because of the factors cited here, we believe that any month-end pressures will prove limited and a potential non-event, especially relative to the month/quarter-ends experienced in 2025.

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday, short tenors were higher by 1 to 6 bps from the week prior, with the 1-month-and-in tenors leading the move. The 1-month was 5 bps higher, while 3-month was 2 bps higher. The market gently pared back further and pushed out the timeline on its pricing of potential Fed rate cuts this year. Meanwhile, after being negative in December through mid-January, net T-bill supply has turned positive again. In turn, our paper widened a touch from prior notably tight levels. GSE funds, parked in the short-end markets prior to MBS payments on the 25th, will leave the financing markets, but pressures in the short-end and on SOFR should be limited. Moreover, Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have clearly added stability to financing markets. Money Market Fund AUM, meanwhile, remains at high levels and has absorbed T-bills and repo demand and thereby benefited our FHLB issuance levels. See the prior section for related comments on the short-end sector.
• The highlight of the upcoming week will be the FOMC meeting and outcome.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was higher from a week ago. The 2-, 5-, and 10-year rose, respectively, by 5, 8 and 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 2/5/7-year auctions which will settle on February 2nd and only raise net new cash of $86mn. 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.