Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending August 14, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
8/17/26 8:30	Empire Manufacturing	Aug	10	15.6
8/17/26 10:00	NAHB Housing Market Index	Aug	33	34
8/18/26 8:30	New York Fed Services Business Activity	Aug	--	8.7
8/18/26 8:30	Housing Starts	Jul	1348K	1427K
8/18/26 8:30	Building Permits	Jul P	1367K	1374K
8/18/26 9:15	Industrial Production MoM	Jul	0.3%	0.1%
8/18/26 10:00	Pending Home Sales MoM	Jul	--	-5.4%
8/19/26 7:00	MBA Mortgage Applications	14-Aug	--	--
8/20/26 8:30	Initial Jobless Claims	15-Aug	--	--
8/21/26 9:45	S&P Global US Composite PMI	Aug P	--	54.5

Economic reports this past week hinted at a more subdued pace of inflation and prompted some pullback in rates; see inside for further color. The Mideast situation remains fluid, thereby leaving its potential impact on inflation still intact. However, at this stage, the market reaction function has decreased until and unless actual agreements take hold, and the effects from an ongoing stalemate appear largely “baked in.” The week ahead offers numerous survey-based reports, aka “soft data,” as well as a set of housing-related reports.

Empire Manufacturing: Following a notable upward move in July, expectations are for this month’s survey diffusion-based index to register a retracement but still portray improving conditions.

NAHB Housing Market Index: The report’s headline builder confidence diffusion-based index is forecast to register another slight dip from July, as sales and prospective buyer traffic are expected to remain on the weak side.

New York Fed Services Business Activity: Last month’s headline index posted a solid increase from June and was the first positive reading in almost two years. All aspects were on the positive side of the sentiment barometer except for ongoing elevated cost pressures. The August report will reveal if the improved sentiment has been sustained.

Housing Starts: Last month’s report for June reversed May’s weakness and handily beat expectations, with the gain driven almost fully by the multifamily sector. July’s results are expected to register a modest decline/payback from the prior month’s strength.

Building Permits (preliminary): A leading indicator for activity, last month’s report for June registered a decline. The preliminary July reading is not expected to show much improvement.

Industrial Production & Capacity Utilization: The July readings are forecast to show slight increases, indicating continued, albeit moderate and uneven, industrial-sector expansion.

Pending Home Sales: Last month’s reading for June was the first MoM decline in five months. The fresh data for July will reveal if a rebound is in store or if higher rates and affordability constraints will again prevent any upswing.

Mortgage Applications: The headline weekly index for the week ending August 7th rose 3.6%, as both purchases and refis registered slight rebounds. The fresh data will reflect through the 14th.

Initial & Continuing Jobless Claims: Initial claims for the week ending August 8th rose by 9K to 209K, thereby pushing up the 4-week moving average by a smidge to 199K. Continuing Claims moved lower from 1799K to 1777K. In the past two months, this dataset’s trend has suggested both employer reluctance to lay off workers and workers exiting the labor force.

S&P Global PMI Report (preliminary): The July survey report revealed that private-sector activity accelerated to its strongest pace in eight months, driven primarily by the services sector. It also revealed an acceleration in prices. Overall, the report indicated modest expansion with ongoing inflation pressures, and so August’s preliminary report will provide an update.

Federal Reserve Bank Member Appearances:
8/19/2026 14:00 FOMC Meeting Minutes: The minutes from the Fed’s July 29th meeting should provide further context on its “hold” decision.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$92bln; $79bln	8/17 -- 8/20
6-Week	$95bln	8/18 -- 8/20
Notes	Offering Amount	Auction Date -- Settle Date
20-Year	$16bln	8/19 -- 8/31
Bonds	Offering Amount	Auction Date -- Settle Date
30-Year TIPS	$8bln	8/20 -- 8/31

 

Key Market Trends

Source: Bloomberg. The highlight of the past week’s economic data, and the main driver of rates, was the back-to-back CPI and PPI (respectively, the consumer and producer price indices) inflation reports. Without “getting into the weeds” on the results, the general market sentiment was that they provided potential evidence that inflation is no longer broadly accelerating. With both datasets coming in “on expectations”, analysts phrased the prints as “subdued” and “showing signs of stabilization.” Nonetheless, at YoY readings of 2.5/4.2% for CPI/PPI, inflation is still running solidly above the Fed’s desired 2% goal and is unlikely to sway the FOMC’s hawks just yet.

Source: Bloomberg. Another signal of a potentially non-dynamic labor market has been evident in the declining Labor Force Participation Rate (LFPR). The LFPR can be calculated as follows: Employed + Unemployed)/Working-Age Population * 100. As seen here, it has declined over the past year and resides below its long-term average. Various factors have contributed to this decline. Analysts cite an aging population and increased retiree levels as major structural factors. Also cited are immigration trends. Given that increased immigration levels can help offset the demographic drag of aging, a decreasing trend in immigration can serve to push the LFPR lower. Notably, the most recent unemployment rate fell to 4.1%, but part of the decline was due to fewer people participating in the labor force rather than stronger hiring. Indeed, recent data has revealed that much lower hiring numbers are needed, relative to past years, to prevent the unemployment rate from rising. The LFPR can be somewhat tricky in terms of conclusions. A lower participation rate can potentially cause job markets to appear tighter than they really are, as a lower rate might be a result of discouraged individuals no longer counted as unemployed once they give up on an active job search. In sum, this data point and last week’s underwhelming jobs report, in combination with this past week’s CPI and PPI releases, have strengthened the odds of the Fed remaining on hold at its September meeting.

Sources: Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was lower and steeper from the week prior, prompted by the market response to the week’s inflation reports. The 2- and 5-year were ~11 and 7 bps lower, respectively. The calmer conditions also inspired a modest decline in MBS spreads and implied option volatility levels. The market now prices slightly less than a single 25-bps hike for the rest of the year. The market’s end-2026 Fed Funds forward is ~3.864%, 10 bps lower than a week ago and which equates to ~94% chance of a 25-bps rate hike in 2026. September prices ~37% chance of a hike. A greater chance and accumulation of hikes is priced for mid-next year, with the June 2027 FOMC forward, at 3.98%, ~13.5 bps lower than a week ago and now pricing in a cumulative 1.4 25-bps hikes. This date represents the cycle peak of rates on the forward curve, at least for the moment.

Source: Bloomberg. Shown here is the Jumbo-to-Conforming mortgage rate spread (Jumbo rate minus Conforming). As seen here, the spread recently took a notable dip into negative territory. Appetite for retained jumbo loans may have been inspired by yields hitting past-year highs in late-July. Perhaps banks, partly owing to easing regulatory constraints, have balance sheet and liquidity capacity to add assets.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning, and relative to a week ago, short-tenors were lower by 2 to 5 bps. The 3- and 6-month were 3 and 6 bps lower, respectively. Contributing to the move was the market’s paring back of prospective rate hikes in the next six months; also contributing was some welcome tightening in our funding spreads on Thursday, as short paper overall traded better than in the previous 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, rebounded in early August after trending lower last month. Moreover, while funds had been decreasing WAM in the prior month, perhaps the more subdued inflation data this week inspired better demand and cooled that trend.
• Net T-bill supply is expected to moderate and turn negative in September nearer the corporate tax date on the 15th. But a few weeks of net positive supply loom. There is a net positive UST settlement on the 17th, followed by Bill settlements on the 18th and 20th. These auction settlements, when net positive, can extract cash from the markets and potentially exert upward pressure on short-end rates and impact our shortest-tenor advance levels. Overnight SOFR, however, appears likely to trade near the Fed’s 3.65% IORB rate, as it has navigated August’s supply well thus far.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was lower and steeper from the week prior. The 2- and 5-year declined by 10 and 5 bps, respectively. 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 30-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.