Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending June 12, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
6/15/26 8:30	Empire Manufacturing	Jun	--	19.60
6/15/26 9:15	Industrial Production MoM	May	0.20%	0.70%
6/15/26 10:00	NAHB Housing Market Index	Jun	37.00	37.00
6/16/26 8:30	Housing Starts	May	1,415k	1,465k
6/16/26 8:30	Building Permits	May P	--	1,423k
6/17/26 7:00	MBA Mortgage Applications	12-Jun	--	10.80%
6/17/26 8:30	Retail Sales Advance MoM	May	0.40%	0.50%
6/17/26 10:00	Pending Home Sales MoM	May	--	1.40%
6/17/26 14:00	FOMC Rate Decision (Upper Bound)	17-Jun	3.75%	3.75%
6/18/26 8:30	Initial Jobless Claims	13-Jun	--	229k

The past week’s economic reports were generally neutral, with some modest improvement revealed in parts of the inflation data. All in all, the data has fortified the Fed’s “on hold” posture. The Mideast situation remains fluid, and any meaningful developments could move the rates market. For now, markets are pricing in greater odds of a Fed rate hike by late-2026 and early-2027. The FOMC outcome on Wednesday afternoon should highlight the upcoming week’s calendar. While no change in policy rates is anticipated, with the lower/upper bounds remaining 3.50/3.75%, the quarterly Summary of Economic Projections (SEP) for growth, inflation, unemployment rate, and policy rate (“dot plot”) will be released and draw market attention. A set of housing market reports is also due in the coming week.

Empire Manufacturing: The monthly survey of manufacturers in New York State conducted by the NY Fed posted its highest reading in four years on its headline diffusion index in May. New orders and shipments were both higher. A negative vibe, inflation-wise, was that prices paid and received were also sharply higher. The fresh report will provide updated context on conditions.

Industrial Production & Capacity Utilization: U.S. industrial activity rebounded nicely M-o-M in April, with output rising solidly and utilization edging higher but still below long‑run norms. The May result will reveal if the improvement had staying power.

NAHB Housing Market Index: Builder sentiment improved modestly in May but remained in contraction territory, with the index sub-50 and reflecting ongoing housing demand softness. The June release will reveal if sentiment can register further, albeit slight, improvement.

Housing Starts & Building Permits: Starts fell 2.8% to 1.465mn M-o-M in April, as a sharp dip in single-family construction offset strength in multifamily. Permits posted a rebound in April, thereby signaling potential forthcoming improvement in the fresh Starts figure for May. Overall, data continues to reflect an uneven housing backdrop.

Mortgage Applications: The past week’s headline weekly index broke a string of declines this past week, with the 10.8% gain reversing last week’s 2.8% drop. Mostly driven by refinancings, the rebound was prompted by post-holiday catch-up and volatile rates that provided more attractive chances to lock in rates.

Retail Sales: Last month’s readings portrayed resiliency in consumer spending. With prices posing a challenge, however, the report for May will reveal if this behavior can be sustained.

Pending Home Sales: Sales rose 1.4% in April (3.2% Y-o-Y), marking a third straight gain and signaling tentative housing demand stabilization. The fresh data from the National Association of Realtors for May will reveal if, amid a higher rate environment, another gain was achieved.

Initial & Continuing Jobless Claims: Initial claims registered a 4K rise in the past week, with the 4-week moving average ticking ~4K higher. Continuing Claims, meanwhile, posted an 24K increase from the week prior. This data was somewhat out of sync with the last week’s stronger-than-expected jobs report.

Federal Reserve Bank Member Appearances:

• 6/06/2026 04:00 Fed’s external communications blackout through the FOMC meeting on the 17th.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	$70bn; $75bn	6/18 -- 6/23
13-Week; 26-Week	$89bn; $77bn	6/15 -- 6/18
6-Week	$65bn	6/16 -- 6/18
TIPs	Offering Amount	Auction Date -- Settle Date
4-Year 10-Month	$24bn	6/18 -- 6/30
Bonds	Offering Amount	Auction Date -- Settle Date
19-Year 11-Month	$13bn	6/16 -- 6/22

 

Key Market Trends

Source: Bloomberg. As a refresher, monetary policy is guided by the Fed's statutory mandate from 1977 to promote "maximum employment, stable prices, and moderate long-term interest rates”, with the employment and inflation goals referred to as the “dual mandate”. At this juncture, conditions are decidedly in favor of a Fed “on hold” posture, and we can see here reasons for that and for the market’s pricing of forthcoming hikes into the forward curve. The Sahm rule indicator, named after the prominent economist Claudia Sahm, is currently far from a warning zone. This is a fairly accurate recession indicator that signals a downturn when the 3-month moving average of the national unemployment rate rises by .5 percentage points or more from its low of the previous 12 months. The current reading of .1 is well below that measure. Meanwhile, also seen here and released this past week, is the May CPI Y-o-Y reading of 4.2%, well above the Fed’s 2% goal. The CPI report revealed some improvement in the M-o-M core reading, hinting at possible moderation ahead. But workers’ real earnings posted a notable decline, and so inflation is clearly taking a bite out of consumers; in this regard, perhaps some of the decline in the core reading was due to a cutback in consumer spending behavior.

Sources: Bloomberg; FHLBNY. A marked change to market pricing of Fed Funds forwards has occurred since the aftermath of the last FOMC meeting at the end of April. At that time, the front of the curve was notably flat, with modest chances of rate hikes priced into 2026-2027. While fluctuating day-to-day with the latest data releases, the market, as of Thursday midday and seen here, has determinedly priced a set of Fed rate hikes over the next year. Given that the projections in the last dot plot are close to “falling off” our chart here, perhaps some updates are in the offing!

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was modestly higher from the week prior, led by shorter tenors. Yields had been 6 to 7 bps higher on Thursday morning, until news of an easing in the Mideast-conflict prompted a midday move lower. The market’s end-2026 Fed Funds forward is ~3.83%, ~5 bps higher than a week ago and which equates to ~82% chance of one 25-bps rate hike for the rest of 2026. A greater chance of hikes is now priced by early next year, with the May 2027 forward, at 3.96%, now pricing in a cumulative 1.35 25-bps hikes.

Sources: Bloomberg; pricing as of late Wednesday. Since the FHLBNY serves as a funding source, we often provide rates color from that perspective. From an asset-side perspective, however, the rise in yields over the past few months provides more opportunistic levels to buy bonds, particularly for those with cash to put to work from older securities paying off and/or those in an asset-sensitive position. Shown here is the 15-year Agency MBS Current-Coupon which has risen notably in recent months. This sector has a shorter duration and less vol/negative convexity than the 30-year sector. Also shown is the price of the 15-year 4.5% coupon; the below-par price on selected coupons can provide better insurance vs. a decline in rates and elevated prepays. Note that the FHLBNY can play a timely and opportunistic role in bond-purchase strategies, as short-term advances can be used to “bridge-fund” bond purchases prior to expected cashflows coming in.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and relative to a week ago, short tenors were mixed. While 1-month dipped by 2 bps, 2- and 3-month were unchanged, and 4- to 6-month rose by 2 to 3 bps. While net T-bill supply has turned negative, there has been relatively heavy issuance in our paper and a recent slight widening in our funding spreads. But overall liquidity and funding conditions have been healthy and steady, and the past week’s decline in SOFR has helped short-tenor rates. Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases program have continued to grease stability in financing markets and help blunt reactions to any net positive UST and T-bill issuance and/or month and quarter-end periods. Money Market Fund AUM, meanwhile, has rebounded solidly from its April tax date-related dip, thereby instilling funds to the short-end markets.
• The week ahead contains a $79bn net-positive UST settlement for the 15th. These net settlements, when positive, can extract cash from the markets and thereby exert upward pressure on short-end rates. The 15th is also the corporate tax due-date. While these events provide potential for upward pressure on financing rates, current conditions appear benign. Furthermore, net T-bill issuance turns negative in the upcoming week and into July. GSE cash should enter the short-end markets next week as a placeholder prior to subsequent MBS coupon payments.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, rose modestly from a week 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 20-year nominal and a 10-year TIPS auction. 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.