Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending September 11, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
9/15/26 8:30	Empire Manufacturing	Sep	12.10	20.60
9/16/26 7:00	MBA Mortgage Applications	11-Sep	--	-2.70%
9/16/26 8:30	New York Fed Services Business Activity	Sep	--	0.50
9/16/26 8:30	Retail Sales Advance MoM	Aug	0.80%	-0.60%
9/16/26 10:00	NAHB Housing Market Index	Sep	34.00	35.00
9/17/26 8:30	Initial Jobless Claims	12-Sep	--	206k
9/17/26 8:30	Housing Starts	Aug	1,315k	1,239k
9/17/26 8:30	Building Permits	Aug P	1,418k	1,433k
9/17/26 10:00	Pending Home Sales MoM	Aug	--	-2.30%
9/18/26 9:15	Industrial Production MoM	Aug	0.30%	0.20%

**Today being the 25th anniversary of September 11, we respectfully pay tribute to the loss, bravery, and spirit of resilience during and following one of the most consequential days in our history.**

Data the past two weeks, since our last edition, was generally unsurprising. Home sales data remains weak, as seen in this past week’s existing home sales report. Last week’s monthly jobs report was sturdy enough to not be an obvious impediment to a Fed rate hike. Meanwhile, inflation data remains elevated, thereby keeping a Fed hike “in play” for the rest of 2026. The Mideast situation lingers and continues to potentially underpin commodity prices and inflation. The highlight of the week ahead should be the FOMC meeting and announcement. In addition to a rate decision, a fresh Summary of Economic Projections (SEP) will be released and provide context on Fed members’ outlooks on the policy rate (“dot plot”), GDP, employment, and inflation. The market deems the meeting as “live”, with a 25-bps hike probability priced ~74% as of Thursday afternoon. See herein for related charts and color.

Empire Manufacturing: Activity in NY posted higher last month, with the index rising to its highest level in over four years. A step back, although still positive-zone, is forecast for this month.

Mortgage Applications: After posting a relatively rare rise the week prior, the headline weekly index for the week ending September 4th fell 2.7%. Refis led the decline, due to higher rates.

NY Fed Services Business Activity: Last month’s survey results were essentially flat overall. Input costs remain a concern. The September report appears poised to register similar results.

Retail Sales: July sales posted a MoM decline, although the 3-month trend and YoY figures were healthy. August is forecast to rebound on the MoM metric.

NAHB Housing Market Index: The August report portrayed below-neutral sentiment, with builders continuing to rely on price cuts and sales incentives to attract buyers. Affordability and demand challenges persist in the housing market, and September’s report is likely to show similar results.

Initial & Continuing Jobless Claims: Initial claims for the week ending September 5th ticked 1K higher from the prior week, with the 4-week moving average ticking 1.5K lower. Continuing claims dipped by 1K. This dataset’s stable trend has suggested both an employer reluctance to lay off workers as well as some workers exiting the labor force.

Housing Starts: Starts notably weakened MoM in July’s tally in both single and multifamily; August’s figures are forecast to register a modest rebound.

Building Permits (Preliminary): July’s decent figures hinted that developers remain willing to pursue projects despite industry headwinds. Gains were seen in both single-family and multifamily construction, perhaps signaling a slightly more constructive tone for housing activity into the tail-end of 2026. The fresh data will reveal if this signal has staying power.

Pending Home Sales: July’s data was weak and lower on both MoM and YoY measures. The fresh release for August will provide an update.

Industrial Production & Capacity Utilization: With figures for July showing expansion for a second consecutive month, the data for August will reveal if the expansion, albeit moderate in scale, has sustained positive momentum.

Federal Reserve Bank Member Appearances: 

• 9/16/2026 14:00 FOMC decision and projections, followed by press conference.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$92bln; $79bln	9/14 -- 9/17
6-Week	$75bln	9/15 -- 9/17
Notes	Offering Amount	Auction Date -- Settle Date
No scheduled Note offerings.
Bonds/TIPs	Offering Amount	Auction Date -- Settle Date
19-Year 11-Month	$13bln	9/15 -- 9/18
9-Year 10-Month	$19bln	9/17 -- 9/30

 

Key Market Trends

 

Source: August 2026 Logistics Managers Index (LMI.com). Areas of upward cost pressures in the goods sector have been transportation, warehousing, and inventories. Indeed, this trend was evident in Thursday morning’s Producer Price Index report. It can also be seen here in the latest LMI Aggregate Logistics Costs survey reading, which, while no longer accelerating sharply, ticked higher from the month prior and remains at levels consistent with ongoing goods-sector inflation pressure. Transportation costs posted one of the strongest readings in the survey’s history. Historically, aggregate costs exceeding 240 in this barometer have tended to lead to increased levels of supply-driven inflation. Clearly, energy prices are a factor in the current environment, and it suggests that supply-chain costs persist as a potential upside risk to inflation in the coming months. While Friday morning’s CPI report may be the predominant focus for the Fed, these elevated logistics costs will likely carry influence too and thereby boost the probability of a forthcoming rate hike.

Source: FHLBNY. As seen here, since the wake of the last FOMC on July 29th, the market has notably repriced higher and sooner the projected timeline of Fed rate hikes. In fact, most of the repricing has occurred in the past two weeks. The upcoming week’s meeting prices a ~74% chance of a 25-bps hike, whereas the market priced ~65% probability after the July meeting and priced even lower than that for most of August. After the July meeting, the market priced a yearend-2026 rate of 3.97%. It now prices yearend at 4.085%. Whereas the market priced a total of 50 bps of hikes after the July meeting, it now prices for 86 bps of hikes by September 2027. A reason for the repricing in the past two weeks has been the resurgence of Mideast hostilities and their potential inflationary impacts. An additional reason was the relatively hawkish address given by Fed Chair Warsh at the end-of-August Jackson Hole Symposium.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was notably higher than two weeks ago. Indeed, the 2- to 5-year zone was over 30 bps higher. Hawkish Fedspeak, higher energy prices, and hesitant investors have underpinned the move. The 5- and 10-year UST reached their highest levels in almost three years. The 30-year, meanwhile, trades at its highest since 2007. The move has, in turn, propelled mortgage rates higher; the 30-year MBS Current Coupon has breached 6% to trade at its highest level since January 2025. Reflecting the global nature of inflation pressures, meanwhile, the ECB hiked policy rates by 25 bps in the Eurozone this past Thursday.

Sources: FHLB Office of Finance; FHLBNY. Following a few months of modest changes, August registered a slightly more notable, albeit relatively moderate, MoM decline in debt outstanding. This barometer helps serve as a gauge of system and advance activity. Data reflect that aggregate bank deposits grew MoM in August, perhaps playing a role in the decrease. For context, the August decline of $38.58bn was well less than half of April’s heady $100.2bn increase. For YTD-2026, total debt outstanding has increased by 11.3% to $1.28bn as of the close of August.

 

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning and relative to two weeks ago, our last edition, short tenors were higher and steeper by 8 to 19 bps. The exception was Overnight, which was unchanged. The primary catalyst for the move has been the market’s repricing of higher/earlier Fed hikes, and that maturities have crossed further into the projected timeline of hikes. In terms of overall liquidity conditions and SOFR behavior, Fed purchases of T-bills via MBS portfolio principal reinvestments and its Reserve Management Purchases (RMP) program have greased stability in financing markets and helped 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, hit a fresh record last week and added cash to the space. Indeed, financing conditions have been tranquil enough that the Fed has paused its RMP until further notice.
• Net T-bill supply has turned negative in September. UST and T-bill auction settlements, when net positive, can extract cash from the markets and potentially exert upward pressure on repo and thereby impact our very-short-tenor advance levels. This change should help quell some of the volatility witnessed this past summer in T-bill and our spreads (in relation to the swaps curve). However, with three potentially “live” FOMC meetings within the 3-month zone, investors have shortened WAM and/or demanded higher spreads on short paper. These dynamics, in turn, have impacted our paper as occurred this past Thursday afternoon. Meanwhile. the September 15th corporate tax date will temporarily remove funds from the system and possibly apply upward pressure to repo rates. SOFR, however, appears likely to revert and trade near the Fed’s 3.65% IORB rate. Net Bill supply is expected to turn positive again in October, and so the calmer conditions could be challenged at that time.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was higher by 30 to 35 bps from two weeks ago. The 2- to 5-year sector led 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 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.