Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending February 27, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
3/2/26 10:00	ISM Manufacturing	Feb	51.80	52.60
3/4/26 7:00	MBA Mortgage Applications	27-Feb	--	0.40%
3/4/26 8:15	ADP Employment Change	Feb	43k	22k
3/4/26 10:00	ISM Services Index	Feb	53.90	53.80
3/5/26 7:30	Challenger Job Cuts YoY	Feb	--	117.80%
3/5/26 8:30	Initial Jobless Claims	28-Feb	--	212k
3/5/26 8:30	Continuing Claims	21-Feb	--	1,833k
3/6/26 8:30	Retail Sales Advance MoM	Jan	--	0.00%
3/6/26 8:30	Change in Nonfarm Payrolls	Feb	60k	130k
3/6/26 8:30	Unemployment Rate	Feb	4.40%	4.30%

Data released in the past week was essentially of the “come-and-go” variety, and impacts on rates were minimal. The Supreme Court’s tariff ruling was notable, of course. However, alternative-measure tariffs have been implemented. These alternatives too will likely face legal challenges. Meanwhile, legal challenges to obtain tariff reimbursements are also underway. In sum, it is likely to take time to discern fresh trends or resolution on this topic. In terms of the Fed policy, a near-term rate cut appears unlikely, and the market fully prices for a 25-bps cut in mid-to-late summer.     

ISM Manufacturing: The report for February will provide fresh data on overall activity, prices, orders, and employment. After months in the doldrums, January registered at 52.6 (above-50 signals expansion) which was the strongest reading since 2022. The February reading is expected to dip slightly to 51.8. 

Mortgage Applications: After a robust start to the year, applications have tapered off in the past month. The past week’s headline index at least posted a positive 2.8% weekly reading, after a -.3% reading the week prior. The fresh data will reveal if slightly lower rates have provided any further tailwind to gains.

ADP Monthly Employment: With the 4-week trailing average of the ADP-Weekly data displaying modest improvement in private job growth, the monthly reading for February is forecast to almost double to 43K from January’s mild reading.

ISM Services: The report on services is expected to increase marginally from last month and remain in the above-50 expansion zone. Data on prices, orders, and employment is part of the report. 

Challenger Job Cuts: The January report registered a whopping 118% increase over January 2025 and 205% increase over December 2025 in job cut announcements. While Q1 typically experiences higher numbers, these results were nonetheless high and dwarfed hiring-plan announcements. However, this data can be tricky, as announcements do not always come to fruition or are delayed.

Retail Sales: This dataset from the Census Bureau has been delayed, owing to government shutdowns. This release for January will follow December’s relatively weak holiday-season flat reading.

Initial & Continuing Jobless Claims: Initial claims in the last week rose by 4K. The 4-week moving average edged higher by 1.25K to 1833K. Continuing Claims, in a less worrisome sign, dropped by 31K and broke a series of weekly increases. Overall, the data portrays a relatively steady yet non-dynamic labor market. 

Employment Situation: Generally considered the marquee data release of each month, the February data is expected to show a much more modest than January nonfarm payroll gain of 60K. The unemployment rate is forecast to tick .1% higher to 4.4%, and average hourly earnings are forecast to decelerate by .1% to a .3% gain for the month. As usual, strategists will analyze revisions and other more extensive data points to garner a better read on labor markets.

Federal Reserve Bank Member Appearances:

• 3/03/2026 09:55  NY Fed President Williams gives keynote remarks at Monetary Policy Implementation Workshop event
• 3/03/2026 11:55  Minneapolis Fed President Kashkari speaks at 2026 Bloomberg Invest Conference
• 3/04/2026 14:00  Fed releases Beige Book – Summary of Commentary on Current Economic Conditions by Federal Reserve district
• 3/06/2026 13:30  Cleveland Fed President Hammack Speaks at Monetary Policy Forum

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

 

Key Market Trends

Sources: Bloomberg; S&P Cotality Case-Shiller (SPCCS). Potentially a milder headwind to home affordability is that of price trends. This past week’s SPCCS home price indices (non-seasonally adjusted) generally reflected a deceleration in prices. Indeed, as seen here, the national index M-o-M measure fell for the sixth straight month in December. Moreover, the Y-o-Y measure declined to a 1.27% gain from the prior month’s 1.43%, thereby signaling, in simple terms, that prices increased Y-o-Y but at a slower pace. Of course, house price trends can be location-specific, and conditions may differ among geographic areas. In this regard, the SPCCS 20-City Composite index, a measure of residential home values in major metro areas, declined only marginally in December from its prior reading. On a separate and helpful note regarding affordability headwinds, the Optimal Blue 30-year Conforming mortgage rate has posted below 6% the last few days, the lowest in three years.

 

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of late Thursday, the UST term curve was 2 to 6 bps lower from the week prior, with the 5- to 10-year zone leading the move. With economic data uneventful, rates meandered up and down in a tight range through the week and then declined a few bps, as stocks weakened, on Thursday afternoon. As of Thursday afternoon, the market prices the chance of a 25-bps Fed ease for the March 18th FOMC at only ~4%, or the same as a week ago. The market’s end-2026 forward is ~3.08%, a bp higher than a week ago and which equates to ~2.25 25-bps rate cuts for the rest of 2026.

 

Source: FHLBNY. In this chart and next, we explore a few of our option-based advance products. Here, we assess the Callable advance, a product which grants the borrower the right to cancel, at no fee and after a pre-determined lockout period, the advance early at either a single specified date (“European”) or on multiple dates (“Bermudan”). This product can be useful for hedging or mitigating interest rate and prepayment risks while also providing flexibility. Since the borrower owns an option to cancel the advance, the Callable coupon will be higher than that of a straight bullet (i.e., non-callable) advance; in other words, the Callable will trade at a positive spread to the bullet. Therefore, the Callable will look most attractive when rates are lower and, ideally, when the spread is also lower/tighter. The spread will usually be lower when options market implied volatility (“vol”) is low. In this example, we use a 5-year No-Call 1-year Bermudan and can see that the spread to the 5-year advance, largely a result of lower vol in the past six months or so, has declined from levels of 2025. Meanwhile, the 5-year swap rate (advance products are priced vs. swaps, and so this measure serves as a barometer), while not at the absolute lows, is in its lower zone of the past year. For those whom this product can be a potential fit, these conditions are relatively attractive from a recent history standpoint.

 

Source: FHLBNY. Here we assess the Putable advance, a mirror-image of the above in that the borrower sells the option to cancel the advance early. Since FHLBNY here buys the option, the Putable will trade at a spread below that of the bullet. Therefore, the product will be most compelling when rates have declined and, ideally, the spread-to-bullet has moved to greater levels. Shown here is the 5-year No-Put 1-year Bermudan spread to the 5-year bullet; it is basically mid-range of the past eight months but below levels of H1 2025, again largely a result of lower vol levels in the options market. While the spread may not be in the most optimal spot of the past year, rates are not too far from the lows of the past three months, thereby making this product still worth consideration for those with term funding needs and the ability to accept the uncertainty on final maturity date.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday, short tenors were mostly lower by a few bps from the week prior. The 1-month-and-in sector led the dip and was 2 to 4 bps lower. Some of the market indigestion from short-end supply increases in T-bills and Agency paper, a dynamic we covered a few weeks ago, has ebbed and allowed for the steady-to-slightly-lower advance levels. Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have, overall, added stability to financing markets and helped to blunt any severe impacts from the higher UST and T-bill issuance. Money Market Fund AUM, meanwhile, remains at high levels and has absorbed short-end paper and repo demand and thereby assisted as a stabilizer.
• Net issuance of UST’s and T-bills remains poised to post a series of days in positive territory into and through most of next week. This dynamic, in combination with potential month-end constraints, may exert pressures on liquidity and upward drift in SOFR which can impact our advance levels. But last month was relatively tame, and conditions have calmed via the Fed’s purchase program and market usage of its Standing Repo Program. Please call the desk to assess rates and to obtain color on market conditions.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was lower by up to 5 bps from a week ago, with the 4- to 10-year zone leading the move. Please refer to the previous section for color on market dynamics and changes. The jobs report will likely have the highest probability of moving markets in the week ahead.
• 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.