Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending January 30, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
2/2/26 10:00	ISM Manufacturing	Jan	48.30	47.90
2/3/26 10:00	JOLTS Job Openings	Dec	--	7,146k
2/4/26 7:00	MBA Mortgage Applications	30-Jan	--	-8.50%
2/4/26 8:15	ADP Employment Change	Jan	45k	41k
2/4/26 10:00	ISM Services Index	Jan	53.30	54.40
2/5/26 8:30	Initial Jobless Claims	31-Jan	--	--
2/5/26 8:30	Continuing Claims	24-Jan	--	--
2/6/26 8:30	Change in Nonfarm Payrolls	Jan	70k	50k
2/6/26 8:30	Unemployment Rate	Jan	4.40%	4.40%
2/6/26 10:00	U. of Mich. Sentiment	Feb P	55.00	56.40

The highlight of the past week was the largely uneventful FOMC meeting at which, as expected, rates were left unchanged. While two officials unsurprisingly dissented on the decision and were in favor of a cut, Chair Powell noted a strong consensus within the Fed to keep rates steady. The Fed noted that unemployment has shown signs of stability and that activity has expanded at a solid pace while inflation remains somewhat elevated. The official statement also removed comments that had noted rising downside risks to employment. The reaction in the rates market was minimal. A pause by the Fed was likely bolstered as well by the lingering uncertainties from delayed and/or partial data, owing to the government shutdown in the Fall, tariff policy and court rulings thereon, and the upcoming transition in Fed leadership this spring. The week ahead offers a few labor market-related reports of which the employment situation report on the 6th should be the most prominent and influential. These reports should add context to the FOMC and Powell’s comments regarding employment dynamics.

ISM Manufacturing Report: The overall index, a diffusion in which a sub-50 reading indicates declining activity, is expected to post a modest rise in January to 48.3 from 47.9. The index has not reflected positive momentum, or an above-50 reading, since March 2025. Related data on prices, orders, and employment will also be released. 

Job Openings & Labor Turnover Survey (JOLTS) Report: December’s results will follow two straight declines in the headline reading. The associated “Quits” and “Layoffs” data will also be announced.  

ADP Employment Change: The monthly private payrolls barometer for January is anticipated to reveal a 4K increase from the prior month’s 41K. Payrolls have generally moved sideways in recent weeks, indicative of a stable yet less dynamic labor market.

MBA Mortgage Applications: After two successive bounces higher to begin the year, the reading dropped 8.5% in the past week’s release. While lower rates and a deceleration in house prices boosted post-holidays activity, if the fresh data mimics the past week’s reading, then a more tempered trend in activity may have taken hold.

ISM Services Activity Report: Reflective of the dichotomy between a weaker manufacturing but sturdier services sector, this index has been above-50 since last June and has posted three straight increases. However, it is expected to register a mild decline, yet still in growth territory, to 53.3 in January from 54.4 last month. 

Initial & Continuing Jobless Claims: Claims have recently stabilized within a non-worrisome range, with the past week posting a 4.75K increase. Continuing Claims remain elevated and symbolic of a less dynamic labor market, but they have managed to tick a bit lower in the past few weeks.

Employment Situation Report: The headline change in nonfarm payrolls for January is expected to be a 70K gain, with the unemployment rate remaining at 4.4%. Such results would generally comport with the FOMC statement’s observation that unemployment has shown signs of stabilization. Associated data on earnings and hours will also be released.

Federal Reserve Bank Member Appearances:

• 1/30/2026 17:00  Fed Vice Chair Bowman Speaks on Monetary Policy and Supervision and Regulation at Southern Methodist University
• 2/02/2026 12:30  Fed's Bostic Speaks at the Atlanta Rotary Club
• 2/03/2026 09:40  Fed Vice Chair Bowman in Moderated Conversation
• 2/05/2026 10:50  Fed's Bostic Speaks with Dean of Clark Atlanta University

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	105 Bln; 95 Bln	2/5 -- 2/10
13-Week; 26-Week	89 Bln; 77 Bln	2/2 -- 2/5
6-Week	90 Bln	2/3 -- 2/5
Notes	Offering Amount	Auction Date -- Settle Date
No scheduled Note offerings.
Bonds	Offering Amount	Auction Date -- Settle Date
No schedulued Bond offerings.

Key Market Trends

Source: Bloomberg. As widely anticipated, the Fed held rates unchanged at the past week’s FOMC. Here we can view some context for the Fed’s decision. Since the end of December economic data has generally posted at higher-than-expected levels, as evidenced in the Citibank Economic Surprise Index which has trended higher during this timeframe. Meanwhile, financial conditions remain far from tight, as seen in the Bloomberg Financial Conditions index which tracks the overall level of financial stress in the U.S. money, bond, and equity markets to help assess the availability and cost of credit. A positive value indicates accommodative financial conditions, while a negative value indicates tighter financial conditions. In his press conference after the FOMC meeting, Chair Powell noted that “the economy has surprised with its strength”. Given these conditions and inflation maintaining somewhat elevated levels, the vast majority of the FOMC committee favored the pause.

Source: Bloomberg. During his press conference, Powell also acknowledged the ongoing disconnect between relatively steady aggregate economic data and downbeat consumer sentiment surveys. While last week’s University of Michigan Consumer Sentiment index posted a slight uptick, this past week’s Conference Board Consumer Confidence index for January was dour. Indeed, it registered its lowest level since 2014. The Present Situation index was the lowest since early-2021, and the Expectations index posted the lowest levels since April 2025. Part of this disconnect is likely due to wealthier cohorts, underpinned by higher income and asset gains, driving the bulk of aggregate activity. Indeed, Powell cited this dynamic. But the Fed places more emphasis on “hard” over “soft” (surveys) data, and Chair Powell noted that containing and subduing inflation is a key goal for the Fed that will help all population cohorts. Moreover, commodity prices have surged this month and market inflation swap levels have ticked higher as well. In that vein, a pause on rates was deemed sensible until clearer conditions evolve.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was steeper than a week ago. The 5-year-and-in zone declined by 4 to 6 bps, while 10-year dipped by ~2 bps. Economic data and the FOMC were mostly unsurprising. Corporate bond issuance has set a record for January but was absorbed with little impact on the curve. Implied volatility, meanwhile, remains near its lowest levels in four years, and this trend has helped mortgage spreads to trade at their lowest levels in a few years. As of Thursday afternoon, the market prices the chance of a 25-bps Fed ease for the March 18th FOMC at ~15%. The market’s end-2026 forward is ~3.15%, or 7 bps lower than a week ago and which equates to just shy of two 25-bps rate cuts for the year.

Source: Bloomberg. Our short-tenor advance rates have experienced upward drift in the back-half of January. A catalyst for this trend has been net T-bill supply which had been negative in December through mid-January but then turned positive again. While T-bill purchases by the Fed’s Reserve Management Purchase program and MBS paydown reinvestments have both helped to quell the impact of supply, there has nonetheless been supply indigestion. Treasury surprised markets with recent boosts in T-bill issuance, and the issuance has been heavier in the shortest tenors. As a result, and as can be seen here in comparison to SOFR swaps, T-bills have cheapened on a relative basis. In other words, T-bill yields have risen relative to SOFR. While the 3-month SOFR swap has been steady, the 3-month T-bill has risen by ~5 to 7 bps since early January. Meanwhile, Agency Discount Note issuance supply also popped higher this month. Consequently, these dynamics have impacted our issuance and advance rate levels. Being a fluid situation, and with tax refund season quickly approaching, perhaps upcoming T-bill issuance will be more easily digested by the market. A monkey-wrench, however, could be another government shutdown in which funds from Treasury are not distributed and thereby potentially gum up liquidity conditions.

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday, short tenors were higher by 1 to 5 bps from the week prior, with the very shortest tenors leading the move. The market, over the past month, has gently pared back 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. Per color from the previous section herein, T-bills, and, in turn, our paper have widened in the past few weeks from prior notably tight levels. GSE funds, parked in the short-end markets prior to MBS payments on the 25th, departed the financing markets this past week, but pressures in the short-end and on SOFR were relatively limited. 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 assisted as a stabilizer.
• The highlight of the upcoming week will likely be the employment situation report at week’s end. Also, the market awaits an announcement of a new Fed Chair and will also monitor potential government-shutdown dynamics.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was lower by 2 to 5 bps from last week. Shorter tenors led the decline. Kindly refer to the previous section for color on market dynamics and changes.
On the UST term supply front, the upcoming week serves a reprieve from auctions. 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.