Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending June 26, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
6/30/26 9:00	FHFA House Price Index MoM	Apr	--	0.10%
6/30/26 9:00	S&P Cotality CS 20-City MoM SA	Apr	--	-0.16%
6/30/26 10:00	Conf. Board Consumer Confidence	Jun	94.60	93.10
6/30/26 10:00	JOLTS Job Openings	May	7,275k	7,618k
7/1/26 7:00	MBA Mortgage Applications	26-Jun	--	1.00%
7/1/26 10:00	ISM Manufacturing	Jun	53.90	54.00
7/2/26 8:30	Change in Nonfarm Payrolls	Jun	125k	172k
7/2/26 8:30	Two-Month Payroll Net Revision	Jun	--	93k
7/2/26 8:30	Unemployment Rate	Jun	4.30%	4.30%
7/2/26 8:30	Initial Jobless Claims	27-Jun	--	--

The past week’s economic reports were generally near expectations, although new home sales registered a subpar surprise for May. The Fed’s favored inflation barometer, the Personal Consumption Expenditure (PCE) deflator index, rose .4% M-o-M in May, or slightly below the market’s expectation of .5%. This result prompted a dip in yields on Thursday morning. But it should be noted that the core-PCE, at .3% M-o-M, remains well above the Fed’s target. Moreover, the core reading for April was revised up from .2 to .3%. The Mideast quasi-resolution has helped to contain term yields and dial down inflation expectations, at least for now. But the situation remains fluid. Note that Friday, July 3rd is a market holiday but not a banking holiday; the FHLBNY will be open. Also note that there is an early-market close on Thursday, July 2nd. Kindly consult with the desk regarding transactions near this timeframe.

FHFA House Price Index: Data will be for April and follow a .1% M-o-M gain in March that portrayed ongoing but slowing price gains and a plateauing housing market amid higher rates.

S&P Cotality Case-Schiller Housing Market Report: Data will be for April and follow March’s slight .67% Y-o-Y gain in the broad national reading but a .16% M-o-M decline in the 20-City index. The fresh dataset will reveal if a broader housing slowdown is underway.

Conference Board Consumer Confidence: The headline reading for June is forecast to improve slightly from last month, but the report is anticipated to portray ongoing subdued current conditions and expectations and cautious consumer sentiment overall.

Job Openings & Labor Turnover Survey (JOLTS): The report for April registered a sharp rebound in openings, largely led by professional & business services, but the fresh data for May is expected to post a lower level of openings. Overall, the report is expected to portray a steady yet non-dynamic state, with subdued hire and quit levels.

Mortgage Applications: The past week’s headline weekly index, driven by refinancings, managed a meager 1% gain, thereby rebounding from the prior week’s 3.8% decline.

ISM Manufacturing Purchasing Managers Report: Last month’s headline index somewhat surprisingly posted the strongest reading since 2022. The fresh figure for June is expected to backtrack a mild .1 and thereby remain in the above-50 expansion zone. The strong new orders and production last month were offset by continued labor softness and still-elevated price pressures.

Initial & Continuing Jobless Claims: Initial claims posted an 11K dip in the past week, with the 4-week moving average remaining roughly steady at 224.25K. Continuing Claims, meanwhile, posted a slight increase from the week prior. This dataset has generally been trending sideways, reflecting a steady albeit non-dynamic market and producing minimal reaction in rates.

Employment Situation Report: The monthly tier-one report will be released a day earlier than usual, given that Friday the 3rd is a market holiday. Nonfarm payrolls are expected to moderate from last month’s above-expectations result. The unemployment rate is expected to remain steady at 4.3%. The market will, as usual, dissect the report for information. But the data is often subject to revision, and so analysts will aim to discern overall trends in the data.

Federal Reserve Bank Member Appearances:

• 6/26/2026 11:30 Minneapolis Fed President Kashkari and Richmond Fed President Barkin appear at Aspen Ideas Panel.
• 7/01/2026 09:30 ECB’s Chief Lagarde, Fed Chair Warsh, BoE’s Chief Bailey, and BoC’s Chief Macklem speak at ECB Central Banking Forum.
• 7/01/2026 09:30 Fed Chair Warsh appears on panel at ECB Central Banking Forum.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$92bn; $79bn	6/29 -- 7/2
6-Week	$80bn	6/30 -- 7/2
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

Sources: Bloomberg; Bureau of Economic Analysis. This past week personal spending data posted another impressive gain, with the headline figure rising .7% M-o-M in May vs. a consensus call for a .6% increase. Adjusted for inflation, the real M-o-M gain was .3%, beating expectations by .1%. The year-to-date trend higher in spending can be seen here, with a 6.3% Y-o-Y increase. Also seen here is that a dip in savings is likely sustaining some of the spending, as some consumers must decrease savings to maintain spending behavior. Indeed, the savings rate has declined ~2.5% from a year ago and now rests ~3%. How long this dynamic can persist is an open question, as higher prices continue to impact consumers. Perhaps the cooling of the Mideast conflict will provide enough relief to sustain spending. Important to note is that the spending figures represent aggregate data, and so the behavior of high-income/wealthier consumer cohorts can serve to boost results.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was 3 to 7 bps lower, with the 2- to 10-year sector leading the declines. Easing Mideast tensions and commodity prices helped the move. Despite robust corporate bond issuance this month, fixed income demand has been sturdy. In terms of Fed pricing, the July 29th meeting prices ~35% chance of a 25-bps hike. The market’s end-2026 Fed Funds forward is ~3.98%, 5 bps lower than a week ago and which equates to ~1.4 25-bps rate hikes for the rest of 2026. A slightly greater chance of hikes is priced into early next year, with the April 2027 forward, at 4.02%, now pricing in a cumulative 1.6 25-bps hikes. The market’s pricing of the Fed path eased from more aggressive levels last week.

Source: Bloomberg. The easing of tensions in the Mideast, in concert with the FOMC statement this month that “the Committee will deliver price stability”, appears to have inspired the market to drive down its pricing of inflation. Indeed, as seen here, inflation swap rates have notably declined in the past month. In the 2.30-2.40% range, the current trading levels have edged closer to the Fed’s stated 2% goal. Note that this decline has not been fully matched by headline yields, as a rise in “real” yields, in addition to pricing of rate hikes in the short-end, has served as an offset.

Source: Bloomberg. The cooling of inflation fears, as evidenced in inflation swaps, are surely tied in part to the recent easing of oil and commodity prices shown here. Note that these levels have retraced a good portion of the rise since winter. It remains to be seen, however, if inflation forces have topped, as various indicators still signal that price pressures are ongoing. Note that yields, as shown here in the UST 5-year, remain above wintertime levels. Reiterating the previous chart’s comments, the rise in real yields has prevented a bigger retracement.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and relative to a week ago, short tenors were 2 to 5 bps higher, with the 3-month-and-in sector leading the move. Late-week widening in our funding spreads contributed to the week-over-week change, as, while net T-bill issuance has been benign, agency issuance has been robust. In terms of overall liquidity conditions and SOFR behavior, 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. Improved dealer intermediation, via lighter regulatory constraints, has also benefited liquidity. Money Market Fund AUM, meanwhile, posted a record high last week, thereby instilling funds to the short-end markets.
• There are sizable net UST auction settlements in the next few days, with $28bn on the 26th and $64.2bn on the 30th which is also quarter-end. These net settlements, when positive, can extract cash from the markets and thereby exert upward pressure on short-end rates. These dynamics could lead to some upward pressure on short-end rates, particularly at quarter-end, although we expect SOFR to trend at or below the 3.65% IORB rate. Note that SOFR mini-spiked to 3.69% on June 15th corporate tax date but quickly subsided thereafter.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was 4 to 8 bps lower versus the week prior, with the 5- to 10-year zone leading the move. 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.