Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending March 20, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
3/23/26 10:00	Construction Spending MoM	Jan	0.10%	0.30%
3/24/26 8:15	ADP Weekly Employment Change	7-Mar	--	9.000k
3/24/26 8:30	Nonfarm Productivity	4Q F	2.40%	2.80%
3/24/26 8:30	Unit Labor Costs	4Q F	3.40%	2.80%
3/24/26 9:45	S&P Global US Manufacturing PMI	Mar P	--	51.60
3/24/26 9:45	S&P Global US Services PMI	Mar P	--	51.70
3/24/26 9:45	S&P Global US Composite PMI	Mar P	--	51.90
3/25/26 7:00	MBA Mortgage Applications	20-Mar	--	-10.90%
3/26/26 8:30	Initial Jobless Claims	21-Mar	--	--
3/27/26 10:00	U. of Mich. Sentiment	Mar F	--	55.50

The past week’s FOMC meeting delivered no rate move, as expected. The Summary of Economic Projections (SEP), meanwhile, contained a handful of modest changes. Real GDP was marked a few tenths of a percent higher over the next few years, unemployment was marked .1% higher in 2027, and inflation was revised slightly higher in this year and next. The “dot plot” of fed funds rate projections was unchanged from December, except for a .125% upward revision to the longer run projection. In his press conference, Chair Powell declared that a rate cut hinged on improvements in inflation, and the market pushed rates higher in response, with strategists dubbing the overall FOMC outcome as a “hawkish pause”. Only one committee member, Governor Miran, dissented, as expected, in favor of a rate cut. The theme of uncertainty, given the Mideast war, was repeated multiple times by Powell, and he also downplayed the importance of the dot plot. The market’s pricing of the Fed has shifted notably upward in the past month; please see herein for more information. The week ahead offers a lighter slate of mostly second-tier data, and so Fed commentary and war developments will play a central role in any market moves.

Construction Spending: January’s figure on the value of construction put in place is expected to decelerate to a .1% M-o-M gain from the prior month’s .3% increase.

ADP Weekly Employment: This 4-week moving average barometer of private payrolls weakened at February’s end, as the latest 9K reading was below the previous week’s 14.75K posting and ended a string of increases over the prior month.

Nonfarm Productivity & Unit Labor Costs: The Q4 2025 data is forecast to register at 2.4% and 3.4%, respectively, and will be monitored by markets and the Fed for its inflation implications.

S&P Global Manufacturing/Services/Composite PMI: The preliminary purchasing manager reports for this month will be released; last month’s readings were above the 50-demarcation line for expansion but not by much.

Mortgage Applications: Given the start of spring homebuying season, increased activity was potentially on the horizon. But last week’s gain decelerated and then this past week’s headline index fell by 10.9%, led by a decline in refinancings and surely impacted by the rise in rates of the past two weeks.

Initial & Continuing Jobless Claims: Initial claims in the last week fell by 8K to 208K. The 4-week moving average again dipped slightly from 212 to 210.75K, while Continuing Claims increased by about 10K. Overall, this dataset remains in a narrow range and continues to portray a relatively steady yet non-dynamic labor market.

University of Michigan Consumer Sentiment: The final data for March will be released and provide a gauge on sentiment and inflation expectations.

Federal Reserve Bank Member Appearances:

• 3/19/2026 00:00 Fed’s external communications blackout ends.
• 3/21/2026 13:30 Fed Chair Powell to make award acceptance remarks at conference.
• 3/26/2026 19:00 Fed Vice Chair Jefferson speaks on the US economy at public meeting.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$89bn; $77bn	3/23 -- 3/26
6-Week	$80bn	3/24 -- 3/26
Notes	Offering Amount	Auction Date -- Settle Date
2-Year / 5-Year	$69bn; $70bn	3/24, 3/25 -- 3/31, 3/31
7-Year	$44bn	3/26 -- 3/31
FRNs	Offering Amount	Auction Date -- Settle Date
1-Year 10-Month	28bn	3/25 -- 3/27

Key Market Trends

Source: Bloomberg. An observation from the FOMC’s dot plot is that there remains a substantial minority (seven participants) that foresee no rate cuts in 2026. Meanwhile, in his press conference, Chair Powell underscored this dynamic via declaring that “if we don’t see that progress (on inflation), then you won’t see a rate cut”. He also emphasized that the Fed is sensitive to the stubborn above-its-target behavior of inflation over the last few years, and so it is in that context that the idea of “looking-through” (in other words, deeming it transitory) energy price inflation will be approached “not lightly”. As seen here, the past week’s release of February Producer Price Index (PPI), a measure of wholesale-level prices, reflected higher-than-desired inflation pressure for the third month in a row. Moreover, the .5% M-o-M core (ex-food & energy) reading was before the onset of the Mideast war. This result served as salt-in-the-wound regarding inflation, given that last week’s reading on January Personal Consumption Expenditure (PCE) was also above target, registering a .4% increase on its core index.

Source: Bloomberg. Shown here is a snapshot of the recent trend in the Fed’s securities portfolio, officially termed the System Open Market Account (SOMA). This past week’s FOMC reaffirmed its plan, initially announced in early-December, to increase this account as a means of maintaining an ample level of reserves and reducing stress in the short-term financing markets. The Fed has been rolling over MBS principal runoff with T-bill purchases, and so, in the process, its MBS holdings decline and UST holdings increase. Meanwhile, also boosting its UST as well as overall holdings, the Fed’s Reserve Management Purchase (RMP) program has been buying $40bn of T-bills per month. As can be seen here, the result has been an overall ~$122bn increase in the overall SOMA securities holdings since December. This dynamic, which we have covered extensively in the past few months, has served to greatly reduce volatility in financing markets and the shortest-tenor advance rates.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of late Thursday, the UST term curve was flatter from the week prior, with the 1-to-7-year sector higher by 2 to 7 bps and led by the shorter tenors. Further out the curve yields were unchanged to a few bps lower. But it has been a volatile week of rate moves, at least compared to prior months. This dynamic is revealed, as seen here, in the notable moves since the end of February and the onset of the Mideast war. The recent dramatic rise in rates has been a global phenomenon, and both the Bank of England and the European Central Bank joined the Fed this week in similar decisions to keep policy rates steady and exercise caution. The market, meanwhile, has notably pared back and delayed pricing of potential Fed rate cuts. The market’s end-2026 forward is ~3.575%, 11.5 bps higher than a week ago and which equates to less than an 18% chance of one 25-bps rate cuts for the rest of 2026. Pricing of a full 25-bps cut has been pushed out to August 2027. And there is even a very slight, at ~6%, chance of a hike priced for the next FOMC meeting on April 29th !

Source: Bloomberg. Since the onset of the Mideast war and as can be seen here on Thursday afternoon, rates volatility and movements have prompted a notable shift upwards in mortgage market-related metrics. A spike in volatility measures has led to a ~15 bps widening in the MBS Current Coupon (implied yield of a par-priced MBS) spread to the UST 5-year/10-year blend, and, in turn, the Current Coupon itself has spiked from ~4.83% to ~5.25%. And consumer mortgage rates have followed suit, with the 30-year rate having climbed to ~6.215% from ~5.91% at the end of February. This action has led to a decline in activity, evidenced in the past week’s mortgage applications readings. Meanwhile, Thursday morning’s release of January M-o-M new home sales fell to the lowest annualized pace since Q4 2022; these recent moves in mortgage metrics will not be a tailwind for struggling housing market dynamics.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and compared to a week ago, short tenors were mixed. The 1-month-and-in sector declined by 2 to 3 bps, assisted by the recent moderation in net T-bill supply which has calmed financing markets while also improving spreads on our issuance. Also, GSE cash enters the short-end markets around this juncture, prior to MBS coupon payments on the 25th. The 2-to-6-month zone was progressively steeper from last week, with 2-month unchanged and 6-month higher by 8 bps. The move higher in this area was largely a result of the market’s repricing of the curve and odds of Fed rate cuts. Despite a hefty net positive UST/T-bill settlement this past Monday, the impact was relatively negligible, with a 5 bps rise in our Overnight that lasted only for that day. 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 reactions to net positive UST and T-bill issuance. Moreover, net issuance has entered a more benign period in spring. Money Market Fund AUM, meanwhile, remains at high levels and has absorbed short-end paper and repo demand and thereby assisted as a stabilizer.
• There are a few net positive UST/T-bill settlement dates ahead on the 27th and 31st, but effects are likely to mild, short-lived, and contained to the very-short and Overnight tenors.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was higher and flatter relative to last week. The 2-year rose by 7 bps, the 5-year by 3 bps, and the 10-year by 1 bp. Please 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, each settling on the 31st. 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.