Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending May 15, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
5/18/26 8:30	New York Fed Services Business Activity	May	--	-14.00
5/18/26 10:00	NAHB Housing Market Index	May	34.00	34.00
5/19/26 8:15	ADP Weekly Employment Change	2-May	--	33.000k
5/19/26 10:00	Pending Home Sales MoM	Apr	1.60%	1.50%
5/20/26 7:00	MBA Mortgage Applications	15-May	--	1.70%
5/21/26 8:30	Initial Jobless Claims	16-May	--	211k
5/21/26 8:30	Housing Starts	Apr	1,420k	1,502k
5/21/26 8:30	Building Permits	Apr P	1,385k	1,363k
5/21/26 9:45	S&P Global US Manufacturing PMI	May P	--	54.50
5/22/26 10:00	U. of Mich. Sentiment	May F	--	48.20

**The Weekly Update will return on May 29th; enjoy the long Memorial Day weekend!**

The past week’s data was influential, as it revealed that inflationary pressures appear definitively present and thereby solidified an on-hold posture from the Fed. Indeed, incoming Fed Chair Warsh is likely to encounter more forceful resistance from committee members to any policy-easing bias at the next FOMC in June. The Mideast situation, meanwhile, remains fluid, and any meaningful developments could move the rates market. Looking forward to next week, the data slate is lighter and composed of second-tier reports. The bond markets will close early on Friday the 22nd for the Memorial Day holiday weekend, and we encourage members to connect with the desk on the timing of any potential end-of-week longer-tenor advances.

New York Fed Services Business Activity: The monthly survey-based indicator will provide context on economic conditions in the service sector in the New York Fed district.

NAHB/Wells Fargo Housing Market Index: The monthly index is expected to remain unchanged at 34 in May. A sub-50 reading indicates overall negative homebuilder sentiment on the sector.

ADP Weekly Employment: This 4-week weekly average series of private payrolls has been on a relatively steady and trend in the past six weeks, registering at 33K this past week.

Pending Home Sales: The April update from the National Association of Realtors serves as a leading indicator and is forecast to post a 1.6% M-o-M gain, a slight uptick from March’s 1.5% increase.

Mortgage Applications: The past week’s headline weekly index, after a series of declines, managed to register a 1.7% gain this past week, and so the fresh data will reveal if gains can be sustained.

Initial & Continuing Jobless Claims: Initial claims registered an 6K increase this past week, for the second weekly increase in a row. The 4-week moving average remained relatively steady. Continuing Claims, meanwhile, rebounded higher by 24K. Overall, this dataset continues to portray a relatively stable yet non-dynamic labor market.

Housing Starts & Building Permits: This dataset for April may be mixed. Starts are forecast to decline 4.5% M-o-M, but Permits are expected to register a modest gain in the preliminary tally.

S & P Global PMI Report: The preliminary purchasing managers survey report for May will provide an update on conditions within the manufacturing and services sectors. Last month’s results, at slightly over the 50-mark, indicated moderate expansion.

University of Michigan Consumer Sentiment: This report will mark the final readings for May. The preliminary results last week reflected weak sentiment and concerns about cost pressures; indeed, the headline index posted a record low of 48.2.

Federal Reserve Bank Member Appearances:

• 5/19/2026 19:00 Philadelphia Fed President Paulson gives keynote address at Atlanta Fed’s Financial Markets Conference.
• 5/20/2026 14:00 FOMC Meeting Minutes from the April 29th meeting will be released and should shed light on the diversity of opinion within the committee.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	$100bn; $95bn	5/21 -- 5/26
13-Week; 26-Week	$89bn; $77bn	5/18 -- 5/21
6-Week	$85bn	5/19 -- 5/21
TIPs	Offering Amount	Auction Date -- Settle Date
9-Year 8-Month	$19bn	5/21 -- 5/29
Bonds	Offering Amount	Auction Date -- Settle Date
20-Year	$16bn	5/20 -- 6/1

Key Market Trends

Sources: Bloomberg; National Federation of Independent Business (NFIB). Released this past week, the NFIB’s Small Business Optimism report remained weak but stable in April, with sentiment below the long-term average as inflation, weak sales, and a declining outlook weighed on small firms. The headline index, at 95.9, registered a smidge below the forecasted 96.1. The Uncertainty index, meanwhile, fell from last month but remains well above its historical average of 68. Please note that beginning on May 26th, the FHLBNY will offer $5mn in grant funding under the 2026 Small Business Recovery Grant (SBRG) Program. Through this program, members will be able to provide grants of up to $10K to qualifying small businesses, including farms and non-profit organizations, that have encountered economic challenges and/or supply-chain constraints and their attendant uncertainty. Funding will be limited to $50K per member. This program represents one of the clear mechanisms by which our Cooperative can benefit its communities and businesses. Please call the desk to learn more and/or review the Bulletin.

Source: Bloomberg. In recent weeks we have presented data charts depicting potential inflationary embers in the works. This past week’s tier-1 data, namely the Consumer Price Index (CPI) and Producer Price Index (PPI), served a clear picture of building inflation pressures. As can be seen here, April CPI registered at 3.8% Y-o-Y, the highest since 2023, while the PPI, a measure of wholesale-level prices, posted a whopping 6% Y-o-Y gain that was the largest since 2022. While these datasets can be, and usually are, “sliced and diced” by economists into various components that may reflect one-off or transitory moves, the past week’s releases portrayed heightened pressure in most all combinations of components. Notably, core-CPI ex-food & energy posted a 2.8% Y-o-Y gain. Core-PPI, meanwhile, registered a 5.2% Y-o-Y increase. Essentially, the data printed above market expectations and well above the Fed’s 2% goal, thereby prompting a rise in yields.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of late Thursday afternoon, the UST term curve was higher by 3 to 8 bps, led by the 2- to 5-year zone. The higher-than-expected inflation data was the main catalyst for the move. In terms of the curve’s 3-month range, yields are trading at or near the top and remain well above the levels of February 27th. For instance, the 2-year closed February at 3.38% and traded at 3.998% as of this writing. The market’s end-2026 Fed Funds forward is ~3.755%, 8 bps higher than a week ago and which equates to ~50% chance of one 25-bps rate hike for the rest of 2026. A greater chance of hikes is now priced into early next year, with the April 2027 forward, at ~3.85%, up 11 bps from a week ago and now pricing a ~88% chance of a 25-bps hike. Overall, the front-end forwards remain relatively flat and fluctuating with the latest news and rate moves.

Source: Bloomberg. Here we show a version, using OIS (Fed Funds) swaps, of the so-called “Near-Term Forward Spread” (NTFS) which is the difference between the 3-month rate 18-months forward minus the current 3-month yield. The NTFS can be a leading indicator of the future stance of monetary policy as well as recessions, and it has been cited in the past in Fed studies and by Fed Chair Powell when discussing policy. The most straightforward and important observation here regards the curve and market pricing. After a period of ~3.5 years of pricing Fed rate cuts and an inverted curve, the market has shifted to now pricing a Fed on-hold posture with a slightly better chance of a hike. Consequently, the NTFS has recently dis-inverted, trading near +13 bps as of Thursday afternoon, and the first two years of the yield curve have become notably flat.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and relative to last week, short tenors were modestly mixed from the week prior. While elevated FHLB System issuance in April and a return this past week of positive net T-bill issuance have spurred some widening in our funding spreads, the overall rate changes have been contained to a narrow zone with the help of short-tenor SOFR swaps which have ebbed to below Fed Funds Effective. The 2-month-and-in advance sector, consequently, was unchanged to a bp lower on the week. The 3-month-and-out tenors increased and steepened by 1 to 2 bps, given the market’s repricing of the Fed. Overall, financing markets remain calmer than those of late-2025, assisted by the moderation in net T-bill supply over the past few months. Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have also 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 decreased last month during tax season but has mounted its usual post-tax date rebuild, and this rebound should help conditions and absorb an expected increase in net T-bill supply.
• The week ahead contains net positive T-bill settlements on the 19th and 21st. These net settlements, when positive, can extract cash from the markets and thereby exert upward pressure on short-end rates. But conditions are expected to remain relatively placid in the weeks ahead.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, moved 3 to 8 bps higher from a week ago, led by the 2- to 7-year sector. Please refer to the previous section for color on market dynamics and changes.
• On the UST term supply front, the upcoming week serves a 10-tear TIPS and a 20-year nominal 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.