Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending July 17, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
7/20/26 10:00	Leading Index	Jun	--	0.10%
7/21/26 8:15	ADP Weekly Employment Change	4-Jul	--	19.750k
7/22/26 7:00	MBA Mortgage Applications	17-Jul	--	-2.70%
7/23/26 8:30	Initial Jobless Claims	18-Jul	--	208k
7/23/26 8:30	Initial Claims 4-Wk Moving Avg	18-Jul	--	1805k
7/24/26 9:45	S&P Global US Manufacturing PMI	Jul P	--	53.90
7/24/26 10:00	New Home Sales	Jun	600k	580k
7/24/26 10:00	New Home Sales MoM	Jun	--	-7.30%
7/24/2026	Building Permits	Jun F	--	1410k
7/24/2026	Building Permits MoM	Jun F	--	-.90%

Economic reports this past week were generally better than expected on both the inflation and business activity front. We provide color herein on the inflation data which spurred a decline in yields. Various survey results portrayed modestly better business sentiment, with the Empire Manufacturing, NY Fed Business Leaders, and Philadelphia Fed Business surveys all posting improvements. The notable exceptions to the improved data were the decidedly worse-than-expected results from the NAHB Housing Market Index and NAR Pending Home Sales data; the former report registered its lowest level of the year, while the latter posted a 5-month low. Elevated rates and challenging affordability continue to be headwinds to improvement in the housing sector. Improved sentiment and inflation readings are likely, at least in part, due to the decline in energy prices in June. But the past week has proven that the Mideast situation remains both unresolved and fluid, thereby leaving its impact on prices potentially still intact.

Leading Index: The Conference Board indicator posted a .1% rise last month and is likely to register a similar reading for June, although a mild improvement could occur on the ebbing of oil & gas prices and their effects on consumer sentiment.

ADP Weekly Employment Change: This 4-week moving average last posted at 19.75K and has decelerated from higher levels of the spring. The fresh result will reveal if a string of three straight slowdowns can be broken.

Mortgage Applications: The headline weekly index for the week ending July 10th dipped by 2.7%, following a 2.2% decline the week prior; the sector continues to face rates and affordability-driven headwinds to mounting any sustained upward momentum.

Initial & Continuing Jobless Claims: Initial claims were dropped by 8K in the past week’s reading, with the 4-week moving average declining by 4.75K. Continuing Claims, meanwhile, fell by 16K from the week prior. The declines served to reinforce the backdrop of a resilient, if non-dynamic, labor market.

S&P Global PMI Reports – July Preliminary: The manufacturing, services, and composite Purchasing Manager Index releases will provide a preliminary update on business conditions. Last month’s readings were modestly in the above-50 expansion zone and reflected a backdrop of an economy that is still growing, maintaining surprisingly decent manufacturing activity, perhaps from data center buildouts, but facing tepid hiring, sluggish services demand, and ongoing inflation pressures.

New Home Sales: The June reading is expected to post a modest rebound from the weak May reading which registered a 7.3% decline from April. Overall, the sector continues to face headwinds from rates and affordability constraints.

Building Permits – June Final: Permits are expected to continue to indicate modest softness in future residential construction activity.

Federal Reserve Bank Member Appearances: The Fed will be in blackout mode before the July 29th FOMC meeting and policy announcement.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	92bn; 72bn	7/20 -- 7/23
6-Week	95bn	7/21 -- 7/23
TIPs	Offering Amount	Auction Date -- Settle Date
10-Year	21bn	7/23 -- 7/31
Bonds	Offering Amount	Auction Date -- Settle Date
19-Year 10-Month	13bn	7/22 -- 7/24

 

Key Market Trends

Source: Bloomberg. The data highlight of the past week was the lower-than-expected Consumer Price Index (CPI) readings for June. As seen here, the headline index posted a rare outright decline of .4% M-o-M, while core (ex-food & energy) registered a flat M-o-M reading. This dataset is often “sliced and diced” into sub-measures, but most variations reflected an easing of price pressures as well as a deceleration in most categories. The data release sparked a notable decline in yields and pullback in the market’s pricing of potential Fed hikes. Indeed, the odds of a 25-bps hike at the July 29th FOMC meeting plunged from ~50% on Monday to ~13% as of Thursday afternoon. Nonetheless, also seen here, the headline CPI Y-o-Y reading of 3.5% remains well above the Fed’s goal of 2%.

Source: Bloomberg. Wholesale inflation data, namely the Producer Price Index (PPI), was also released this past week and showed improvement. But the data still portrays potential price pressures that may eventually be passed on to consumers. Clearly, the 5.5% headline and 4.7% core readings are elevated. Also, this month’s dips were heavily energy-related. As can be seen here, the bulk of non-energy components, shown in the bars, sum to ~4.2% Y-o-Y and were essentially flat from the prior month’s already-elevated level. In this regard, while the week’s inflation data very likely took a hike off the table for this month’s FOMC, the Fed is unlikely to consider inflation pressures as conquered yet.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was higher and steeper by ~3 to 8 bps from two weeks ago, our last edition. But, as seen here, the curve notably retraced since this past Monday’s close, as Tuesday and Wednesday’s inflation data sparked a reduction in yields led by the front end. In terms of Fed pricing, the July 29th meeting prices ~12% chance of a 25-bps hike. The market’s end-2026 Fed Funds forward is ~3.91%, 4 bps lower than two weeks ago and which equates to ~1.1 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 4.015%, now pricing in a cumulative ~1.5 25-bps hikes. April 2027 represents the near-term peak of rates om the forward curve, at least for the moment.

Sources: US Treasury; Cranes; ICI; Barclays Research. As seen here, Money Market Funds (MMFs) have been shortening their weighted average maturities (WAMs) in the past two months. Likely this move has been due to the expected upswing in net T-bill supply in summer as well as the Fed being “in play” for potential rate hikes. Consequently, MMFs, boasting record AUM as of last week, have steered funds towards repo from T-bills. These dynamics can and have impacted T-bill spreads (vs. SOFR swaps, for instance) and, in turn, spreads on our paper as well. With T-bill net supply expected to rise considerably in this year’s H2, this pressure may persist. But elevated AUM inflows to MMFs, as well as ultra-short and short-term bond funds will hopefully contain any extreme reactions.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of midday Thursday and relative to our last edition two weeks ago, short tenors were modestly lower. Our shortest 2-week-and-in tenors declined by 2 to 4 bps, while the 1- to 6-month dipped by 1 or 2 bps. Slightly improved demand for short paper helped our funding spreads since late last week. 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, has instilled funds to the short-end markets. These dynamics have helped to restrain extreme movements in SOFR. Indeed, SOFR dipped to 3.53% on July 9th before rebounding, once settlement slugs of net positive T-bill and UST supply hit in the past week, to 3.64%.
• Net T-bill supply has made a pronounced turn into positive territory over the summer, and the upcoming week will present sizable settlements on the 21st and 23rd. These auction settlements, when net positive, can extract cash from the markets and thereby exert upward pressure on short-end rates and thereby impact our shortest-tenor advance levels. However, GSE cash is expected to enter the financing markets this week in typical fashion, prior to MBS payments. This cash infusion is expected to help keep SOFR at or near the Fed’s 3.65% IORB rate.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was higher and steeper by 3 to 8 bps from two weeks ago but had retraced from even higher levels before the inflation data this past Tuesday morning. 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, settling on the 24th and 31st, respectively. 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.