Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending July 31, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
8/3/26 10:00	ISM Manufacturing	Jul	54.00	53.30
8/3/26 10:00	Construction Spending MoM	Jun	--	0.10%
8/4/26 10:00	JOLTS Job Openings	Jun	--	7,594k
8/5/26 7:00	MBA Mortgage Applications	31-Jul	--	-6.40%
8/5/26 8:15	ADP Employment Change	Jul	75k	98k
8/5/26 10:00	ISM Services Index	Jul	54.30	54.00
8/6/26 8:30	Initial Jobless Claims	1-Aug	--	197k
8/6/26 8:30	Initial Claims 4-Wk Moving Avg	1-Aug	--	202.75k
8/7/26 8:30	Change in Nonfarm Payrolls	Jul	90k	57k
8/7/26 8:30	Unemployment Rate	Jul	4.30%	4.20%

Economic reports this past week were mixed and relatively non-impactful market-wise. A few housing reports posted slightly better than expectations and poor results the month prior. Inflation and growth data, meanwhile, were generally milder than prior readings. Clearly, the main event of the week was the FOMC outcome. Policy rates were left unchanged, and the unchanged statement and initial comments from Chair Warsh in the press briefing contained hawkish overtones. Also, three of the twelve voters dissented in favor of a rate hike. However, as the press conference dragged on, the market’s response was to notably steepen the curve. The market appears to be questioning Warsh’s true demeanor, as in, “talk is cheap,” about delivering 2% inflation or price stability, unless the Fed were to boost its credibility via a rate hike(s) and/or provide clearer guidance/metrics on potential forthcoming hikes. The market repriced the prospective Fed path and moved the front-end of the curve lower, while longer-tenor yields moved higher on perceived higher inflation risk and term premium. In the meantime, the Mideast situation remains unresolved and fluid, thereby leaving its potential impact on inflation still intact. Labor market data highlights the week ahead, with the jobs report the prime report.

ISM Manufacturing Report: The June headline manufacturing purchasing manager index registered 53.3, down slightly from 54.0 in May. With an above-50 reading indicating expansion, the result represented the sixth straight month in that zone. The July figure will reveal if the trend remains intact. Survey responses on prices paid, new orders, and employment will also be released.

Construction Spending: The May reading posted a .1% MoM gain, supported by public construction, although the YoY rate was in negative territory. The June reading will provide an update.

Job Openings and Labor Turnover Survey: The BLS report for June will provide fresh context on the labor market. Last month’s report essentially portrayed a non-dynamic market in which labor demand remains solid vs. supply, and the labor market continues to cool gradually rather than sharply. Likely a similar report is in store.

Mortgage Applications: The headline weekly index for the week ending July 24th fell 6.4%, as the week prior’s gain of 1.9% could not be sustained. Both purchases and refis registered declines.

ADP Monthly Employment Change: After dropping from 122K to 98K last month, the July tally is forecast to drop by 23K to 75K jobs added, based on a recent slowing trend in ADP’s weekly readings.

ISM Services Report: The headline PMI registered 54, down slightly from 54.5 in May, but remained firmly in expansion territory and is forecast to post at 54.3 for July and thereby mark the 25th consecutive month of expansion in the services sector. Survey responses on prices paid, new orders, and employment will also be released.

Initial & Continuing Jobless Claims: Initial claims increased by 9K in the past week’s reading, with the 4-week moving average dipping by 4.75K. Continuing Claims fell by 7K. In the past six weeks, this dataset has been in a general and modest downward trend, and the data reflects both employer reluctance to lay off workers and workers exiting the labor force.

Employment Situation Report: June nonfarm payrolls increased by 57K, below expectations and down from May's revised 129K gain. The unemployment rate edged down to 4.2%, although labor-force participation fell to 61.5%. A nonfarm payroll gain of 90K is the consensus forecast for July along with a slight uptick in the unemployment rate to 4.3%. Most other metrics are expected to remain virtually steady vs. last month.

Federal Reserve Bank Member Appearances:

• 8/06/2026 17:30 St. Louis Fed President Musalem speaks at the Center for Public Policy Debate.
• 8/07/2026 10:00 Richmond Fed President Barkin speaks at National Association for Business Economics event.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week	$110bln; $100bln	8/6 -- 8/11
13-Week; 26-Week	$92bln; $79bln	8/3 -- 8/6
6-Week	$95bln	8/4 -- 8/6
52-Week	$52bln	8/4 -- 8/6
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. Here, the notable steepening of the 2-year vs. 10-year yield curve can be seen in the wake of the FOMC announcement. Also shown is the 30-year UST yield which rose to its highest level since 2007. While the 30-year point generally holds less attention in the banking sector, it does influence MBS and mortgage rates. It also is a point for hedging and investment for the life insurance sector. The notable spike in the 30-year yield portrays investors’ increased perception of inflation and term premium risk in reaction to the FOMC outcome.

Source: Bloomberg. The push higher in longer-tenor rates has spurred a rise, as seen here, in mortgage rates to the high of the past year. Higher rates have, unsurprisingly, played a leading role in housing affordability or lack thereof. As seen here in the University of Michigan Consumer Sentiment report, the share of respondents declaring homebuying conditions as favorable vs. unfavorable has been well underwater in recent years; also clear here is the high correlation between higher rates and unfavorable sentiment. This week’s move higher in rates will likely exacerbate this dynamic. The final reading on the Michigan report will be released on Friday morning near the time this Weekly edition hits inboxes, thereby providing a fresh look at this dynamic.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was steeper than the week prior, with shorter tenor yields lower and the very long-end higher. Given the week’s action and moves on FOMC day, the week-over-week changes appear relatively tame! The 2-year led the week-over-week move, as the market repriced the Fed. The market’s end-2026 Fed Funds forward is ~3.97%, 11 bps lower than a week ago and which equates to ~1.4 25-bps rate hikes for the rest of 2026. A greater chance and accumulation of hikes is priced for mid-next year, with the June 2027 FOMC forward, at 4.115% and 11.5 bps lower than a week ago, now pricing in a cumulative 1.9 25-bps hikes. This date represents the cycle peak of rates on the forward curve, at least for the moment.

Source: FDIC Banking Profile. The banking industry has undergone a recent period of mostly good news, with rising bank stock prices, decent earnings reports, rising loan levels, and eased or easing regulatory frameworks. Potential further positive news, for FDIC-insured banks at least, was the FDIC’s late-June announcement of a proposed decrease in the assessment rate schedules paid by banks into the Deposit Insurance Fund (DIF). The FDIC has proposed an increase of the threshold for a bank to be classified as “large” from $10bn to $30bn in assets, thereby decreasing fee schedules for banks in that zone. Additionally, it proposes a 2 bps decrease in the initial base assessments for banks with total assets under $30bn and by 1 bp for “large” and “complex” banks. For context, the assessment fees, paid quarterly on an annualized basis, typically range from ~3 to ~30 bps of assessable insured deposits, with smaller well-rated banks paying the least and larger ones paying more; larger, more “complex”, and/or non-well-rated pay the higher scale of fees. In sum, the proposal, if finalized after a public comment period, would modestly reduce assessment expense for both small and large institutions. As seen here, the end-Q1 DIF reached a record 1.43% of insured deposits, and this trend appears to have spurred the FDIC to propose the reduction in insurance assessment fees.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning and relative to a week ago, the short-tenor curve was mostly lower by 4 to 6 bps. The very-short Overnight and 1-week were higher by 8 and 3 bps, respectively, owing to a volatile short-end curve in T-bills and our paper that had impacted our advance rates notably in the two weeks. Our 1-month-and-out tenors posted their declines post-FOMC, as the Fed failed to deliver the 25-bps hike that was ~35% priced into the curve; the market shaved and pushed back the timing of hikes, in reaction to the Fed. 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 helped demand for short paper, although AUM has slipped in recent weeks, and funds have also decreased WAM. These dynamics have overall helped to restrain extreme movements in SOFR.
• Net T-bill supply has made a pronounced turn into positive territory this summer, and the week ahead serves a few days of net positive settlements on the 4th and 6th. These auction settlements, when net positive, can extract cash from the markets and thereby exert upward pressure on short-end rates and impact our shortest-tenor advance levels. Still, overnight SOFR is expected to remain at or near the Fed’s 3.65% IORB rate, although expected heavy August supply could pose a challenge. Please call the desk for updates on these dynamics.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was steeper from the week prior. While the 2-year fell by 9 bps, the 5-year declined by 5 bps and 10-year was unchanged. Please refer to the previous section for color on market dynamics and changes.
• On the UST term supply front, the upcoming week serves as a reprieve from auctions. Note that UST auctions usually occur at 1 p.m. and can occasionally spur volatility around that time. Please contact the Member Services Desk for further information on market dynamics, rate levels, or products.