Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending May 29, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
6/1/26 10:00	ISM Manufacturing	May	53.20	52.70
6/2/26 10:00	JOLTS Job Openings	Apr	6,866k	6,866k
6/3/26 7:00	MBA Mortgage Applications	29-May	--	-8.50%
6/3/26 8:15	ADP Employment Change	May	110k	109k
6/3/26 10:00	Factory Orders	Apr	4.50%	1.50%
6/3/26 10:00	ISM Services Index	May	53.70	53.60
6/4/26 5:30	Challenger Job Cuts YoY	May	--	-20.90%
6/4/26 8:30	Initial Jobless Claims	30-May	--	215k
6/4/26 8:30	Continuing Claims	23-May	--	1,786k
6/5/26 8:30	Change in Nonfarm Payrolls	May	93k	115k

The past two weeks’ economic reports have generally reflected weak “soft”, or survey-oriented, data. The poor sentiment was most clearly evidenced in last week’s record low University of Michigan Consumer Sentiment reading for May. Meanwhile, “hard” data, or readings of actual aggregate activity, have been relatively steady and occasionally have bested expectations. Inflation data has proven concerning and seemingly cemented, for now, the “on hold” posture for the Fed. The Mideast situation remains fluid, and any meaningful developments could move the rates market. Indeed, the past week’s news of a potential resolution framework, or prospects of a memorandum of understanding on a framework, led to a decline in oil prices and yields. Looking forward to next week, the data slate is heavy on labor market-related releases, with the monthly jobs report the likely highlight.

ISM Manufacturing Report: After last month maintaining the highest level since August 2022, the Institute for Supply Management headline index is forecast to post a slight improvement to 53.2. Results on prices paid, new orders, and employment will also be included in the report.

Job Openings & Labor Turnover Survey (JOLTS) Report: The monthly report from the BLS will provide April data on openings, quits, and layoffs.

Mortgage Applications: The past week’s headline weekly index resumed declines in the past two weeks, as higher rates weighed on activity. Perhaps the move lower in rates this past week can provide a slight lift to activity in the week ahead.

ADP Weekly Employment: This 4-week weekly average series of private payrolls has been on a relatively steady trend in the past two months.

Factory Orders: The monthly release from the Census Bureau will provide an update on manufacturing sector conditions in April, following a somewhat surprising 1.5% gain in March.

ISM Services Report: The sibling ISM report will update conditions, prices, orders, and employment in the services sector for May; the headline index is expected to remain steady at 53.6.

Challenger Job Cuts Report: Following a drop last month, the monthly report for May will provide a leading indicator for trends in planned corporate layoffs.

Initial & Continuing Jobless Claims: Initial claims registered a slight 4K rise in the past week, with the 4-week moving average ticking ~7K higher. Overall, this dataset continues to portray a relatively stable yet non-dynamic labor market.

Employment Situation Report: The monthly jobs report for May will round out the week’s data on labor market conditions. The nonfarm payrolls figure is forecast to register a 95K gain vs. last month’s 115K. The unemployment rate is expected to remain at 4.3%. Overall, the report is expected to reflect an ongoing relatively stable, albeit non-dynamic, jobs market.

Federal Reserve Bank Member Appearances:

• 5/29/2026 12:40 San Fran Fed President Daly speaks at Reagan National Economic Forum.
• 5/31/2026 08:30 Fed Governor Waller speaks on stablecoins at 32nd Dubrovnik Economic Conference.
• 6/03/2026 14:00 Fed Releases Beige Book, a Summary of Commentary on Economic Conditions across its regional districts.
• 6/04/2026 13:10 San Fran Fed President Daly speaks at Bloomberg Technology Summit.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	$100bn; $95bn	6/4 -- 6/9
13-Week; 26-Week	$89bn; $77bn	6/1 -- 6/4
6-Week	$75bn	6/2 -- 6/4
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

Source: Bloomberg. The Fed’s favored inflation indicator, the Personal Consumption Expenditure deflator, was released this past Thursday morning. While essentially in line with expectations, the data reflected that inflation metrics remain elevated and likely cemented a Fed “on hold” posture for the time being. Indeed, as seen here, the inflation figures are well above the Fed’s stated 2% goal and trending in the wrong direction.

Source: Bloomberg. Despite elevated inflation metrics, most of the rise in yields over the past few months has been driven by term premium. Shown here is the yield on a 10-year TIPS (inflation protected) bond which effectively serves as a measure of “real”, or ex-inflation, yield. Also shown here is the Breakeven inflation rate for a 10-year TIPS, which, equates to the difference between a regular UST bond yield and the TIPS yield. These two components added together will essentially equal the yield on a regular UST. Over the past three months, the inflation component has risen ~15 bps. But the real yield component has increased by ~35 bps. This observation reveals that the market is charging a higher term premium for longer tenors and that the increase in yields may perhaps be partly a structural shift in yield levels and not just a reaction to elevated inflation metrics. Also to note, is that the higher term premium serves as a form of tightening in financial conditions.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of late Thursday afternoon, the UST term curve was modestly lower and flatter than that of two weeks ago at the time of our last edition. The news of a potential resolution framework for the Mideast conflict prompted a decline in yields this past week. Yields remain well above the levels of February 27th. For instance, the 5-year closed February at 3.52% and traded at 4.16% as of this writing. The market’s end-2026 Fed Funds forward is ~3.78%, 2.5 bps higher than two weeks ago, which equates to ~64% 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 ~3.875%, up 2.5 bps from two weeks ago and now pricing just over 100% chance of a 25-bps hike. Overall, the front-end forwards remain relatively flat and are fluctuating with the latest news and rate moves.

Source: Bloomberg. Shown here is the daily trend of net (new cash raised vs. pay down) UST and T-bill issuance. After a period of benign and/or negative net issuance, along with investment cash inflow to the short-end, short-end rates, as seen here in SOFR, staged a notable decline in mid-May. This decline occurred even as net issuance began an uptick, helped by AUM growth in Money Market Funds. GSE cash investments into the short-end, prior to MBS coupon payments on/near the 25th, also assisted the decline in SOFR. Indeed, SOFR even hit 3.50%, equal to the Fed Funds lower bound and the Fed’s Reverse Repurchase Rate, on May 20th. Given that advance rates track SOFR and SOFR swaps, the Overnight rate also notably dipped last week. But these conditions have faded this past week, as GSE cash exited the repo markets, and net issuance is expected to remain on a positive trend until after the June 15th corporate tax date. SOFR and our Overnight rate have both, in turn, rebounded from levels of a week ago.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and relative to two weeks ago, our last edition, short tenors are higher. But the change occurred in the past few days, as positive net T-bill issuance entered the scene. The 1-month to 6-month sector is 2 to 5 bps higher from two weeks ago, again mostly a result of the return this past week of positive net T-bill issuance and consequent slight widening in our funding spreads. Nonetheless, Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have 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, has mounted its usual post-April tax date rebuild, and this rebound should help absorb the near-term increase in net T-bill supply.
• The week ahead contains net positive T-bill settlements, as seen in our chart in the previous section. These net settlements, when positive, can extract cash from the markets and thereby exert upward pressure on short-end rates. In the week ahead, SOFR and short rates may endure upward pressure but are expected to be contained to the 3.65% IORB rate or near.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, moved modestly lower and flatter by a few bps from two weeks ago. Please 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.