Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending April 03, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
4/6/26 10:00	ISM Services Index	Mar	54.90	56.10
4/7/26 8:15	ADP Weekly Employment Change	21-Mar	--	10.000k
4/8/26 7:00	MBA Mortgage Applications	3-Apr	--	-10.40%
4/9/26 8:30	Personal Income	Feb	0.30%	0.40%
4/9/26 8:30	Personal Spending	Feb	0.60%	0.40%
4/9/26 8:30	Initial Jobless Claims	4-Apr	--	202k
4/9/26 8:30	Continuing Claims	28-Mar	--	1,841k
4/9/26 8:30	GDP Annualized QoQ	4Q T	0.70%	0.70%
4/10/26 8:30	CPI MoM	Mar	0.90%	0.30%
4/10/26 8:30	CPI YoY	Mar	3.40%	2.40%

The past week was relatively devoid of high-impact data, and market direction was largely dictated by Mideast war news. The market’s pricing of the Fed, meanwhile, has shifted yet again and reversed some of its notable upward move of the past month; please see herein for more information. Essentially, the possible detrimental economic impacts of a prolonged conflict may now, at current yield levels, be serving as a counterweight to the inflationary impacts. The Mideast war should continue to be the dominant driver of markets, and it is an uncertain dynamic. Indeed, prediction markets, as of Thursday, price the odds of a ceasefire by the end of April at ~25% and by the end of June at ~59%. Subsequent to the monthly employment report released just prior to this Weekly Update hitting inboxes, the upcoming week will serve a slate of potentially impactful inflation data.

ISM Services Report: The March Purchasing Manager Indices will provide a fresh reading on overall services sector activity as well as orders, employment, and prices. While the overall index is forecast to slightly dip from last month, it is expected to remain in expansion territory.

ADP Weekly Employment Change: This barometer of private payrolls, a 4-week moving average, has been printing in the 10K-zone in recent weeks. However, this past week’s monthly tally surprised to the upside at 62K vs. expectations of 40K, and so perhaps the weekly number will rise a bit.

Mortgage Applications: Increased springtime activity has yet to arrive, as the past week’s headline index fell by 10.4%, the fourth decline in a row, led by a drop in refinancings and surely impacted by the rise in rates over the past month.

Personal Income & Spending Report: The monthly readings for February will provide hard data on consumer patterns, and the price index data will be closely watched for its inflation implications; last month’s price data was a .4% M-o-M and 3.1% core Y-o-Y readings, both clearly above the Fed’s 2% goal.

Initial & Continuing Jobless Claims: Initial claims dipped by 9K in the last week to 202K, near the lows of the past two years, with the 4-week moving average edging 3K lower to 207.75K. Continuing Claims registered a 25K increase after having declined to a 2-year low last week. Overall, this dataset continues to portray a relatively steady yet non-dynamic labor market.

Gross Domestic Product: The final estimate of Q4 2026 GDP, following the .7% second-estimate gain announced a few weeks ago, will provide context on growth and consumption.

Consumer Price Index (CPI): The March data will help to assess inflationary forces leading into the next FOMC on April 29th. The February readings remained above the Fed’s desired target.

University of Michigan Consumer Sentiment: The preliminary March report will post sentiment readings on current conditions, expectations, and inflation. Last month’s result declined from the month prior, although it was still slightly in the “above-50” optimistic zone, and so the fresh data will reveal if there has been any change in sentiment on account of the ongoing Mideast conflict.

Federal Reserve Bank Member Appearances:

• 4/07/2026 12:35 Chicago Fed President Goolsbee speaks on monetary policy at Detroit Economic Club event.
• 4/08/2026 14:00 Release of March 18th FOMC Meeting Minutes.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	$80bn; $75bn	4/9 -- 4/14
13-Week; 26-Week	$89bn; $77bn	4/6 -- 4/9
6-Week	$70bn	4/7 -- 4/9
Notes	Offering Amount	Auction Date -- Settle Date
3-Year	$58bn	4/7 -- 4/15
9-Year 10-Month	$39bn	4/8 -- 4/15
Bonds	Offering Amount	Auction Date -- Settle Date
29-Year 10-Month	$22bn	4/9 -- 4/15

Key Market Trends

Source: Bloomberg. The dynamics of the past month, largely in reaction to the Mideast conflict and inflation concerns, have been a global phenomenon. Shown here are the government bond yields of the US, UK, Europe, Australia, and Canada. Each has staged a notable upward move in the past month. Given that much of the world is impacted by the conflict, and, also, many investors manage a global investment portfolio, this trend is unsurprising. The upward trend in yields stalled this past week, however, as the higher yields appeared to attract buyers. Moreover, the potential recessionary impacts of an ongoing conflict appear to now be emerging in the market’s pricing of yields.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of late Thursday, the UST term curve was lower and steeper from a week ago. The 2, 5, and 10-year were ~20, 15, and 10 bps lower, respectively. Scattered hints of a possible Mideast war resolution, or at least willingness to consider one, prompted some of the move. Yields also reached levels that proved attractive to some investors, especially if/when the ongoing conflict potentially poses more severe economic headwinds. In this respect, the market completely reversed the prospective policy tightening that had been priced into the curve last week. The market’s end-2026 forward is ~3.58%, ~22 bps lower than a week ago and which equates to ~24% chance of one 25-bps rate cut for the rest of 2026. A 100% chance of a cut is priced by the end of 2027. Note that the front end of the curve will be susceptible to movement post the jobs report to be released after this edition went to press.

Source: Bloomberg. In the next two charts, we expand on a topic from last week’s edition. The onset of war and uncertainty has unleashed notable market moves and overall increased volatility. As we described last week, implied volatility (“vol”) in options markets has spiked higher from its low levels of wintertime. It has receded in the past week, however, as yields retraced from higher levels, but it remains well above the 4-year low reached in January. Shown here is a specific swaption structure, the “2-year expiry into 3-year swap”, that will serve as an accompaniment to our next chart. Most of its increase, much like the “1-year expiry into 2-year swap” structure we presented last week albeit less extreme, has occurred since end-February.

Source: FHLB-NY. In relation to our Putable advance product, the rise in vol serves to improve its relative pricing. As a refresher, via the Putable advance, the borrower sells to FHLB-NY the option to cancel the advance early at either a single specified date (“European”) or on multiple dates (“Bermudan”) at no fee and after a pre-determined lockout period. The 2-year into 3-year swaption vol shown in our previous chart is pertinent, as it roughly matches the tenor and lockout period, to the pricing of a 5-year No-Put 1-year (“5NP1”) Bermudan Putable advance. As can be seen here, the recent spike in vol spurred a notable move lower (i.e., “better”) since a month ago in the Putable’s rate spread to a 2-year bullet (non-cancelable) advance. The 2-year bullet was chosen as a comparison point, since it has a similar duration at inception to the 5NP1 Bermudan structure; the dynamics of the spread are similar if compared to a 1-year or 5-year bullet advance. Compared to the 3NP1 Bermudan that we presented last week, the 5NP1 spread has declined a greater number of basis points owing to its slightly longer duration and higher option value. Naturally, the recent move higher in rates has outweighed the impact of vol, and so Putable advance rates have accordingly moved higher in the past month. But for members who are currently booking and funding new asset pipelines and are comfortable with the final-maturity uncertainty, the Putable advance can be a compelling term-funding alternative to add to the funding toolkit. Please call the desk to learn more and/or for pricing of the various structures that we offer.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and compared to a week ago, short tenors were mildly mixed. The sub-4-month tenors were a bp or two higher, as a slight widening in our paper impacted levels. Overnight experienced some upward pressure from quarter-end and UST settlements, but the impacts were relatively limited. Financing markets remain calmer compared to late-2025, assisted by the recent moderation in net T-bill supply. Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have also, overall, added stability to financing markets and helped to blunt any severe reactions to any net positive UST and T-bill issuance and/or month and quarter-end periods. Money Market Fund AUM, meanwhile, remains at high levels and has absorbed short-end paper and repo demand and thereby assisted as a stabilizer.
• The week ahead appears benign, in terms of UST and T-bill settlements which take cash from the markets and thereby exert upward pressure on short-end rates. However, the looming tax payment date on April 15th may exert some stress, but the above-mentioned mitigants should help to prevent dramatic impacts on rates.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was lower and steeper from the week prior. The 2, 5, and 10-year declined by 16, 12, and 7 bps, respectively. 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 3/10/30-year 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.