Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending September 18, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
9/22/26 8:15	ADP Weekly Employment Change	5-Sep	--	16.250k
9/23/26 7:00	MBA Mortgage Applications	18-Sep	--	-4.10%
9/23/26 9:45	S&P Global US Manufacturing PMI	Sep P	--	53.90
9/24/26 8:30	Initial Jobless Claims	19-Sep	--	196k
9/24/26 10:00	New Home Sales	Aug	615k	607k
9/24/26 10:00	New Home Sales MoM	Aug	1.30%	-10.50%
9/24/2026	Building Permits	Aug F	--	1,394k
9/24/2026	Building Permits MoM	Aug F	--	-2.70%
9/25/26 8:30	Durable Goods Orders	Aug P	-0.30%	1.10%
9/25/26 10:00	U. of Mich. Sentiment	Sep F	--	47.80

Data this past week generally portrayed the ongoing trend of elevated prices (Empire State manufacturing and Philadelphia Fed Business survey prices up), stable labor markets (improved jobless claims), and relatively decent overall economic activity (retail sales sturdy) except for the housing sector (lower sentiment/starts/permits). The Mideast situation lingers and continues to potentially underpin commodity prices and inflation. Indeed, using one of its only levers for quelling inflation forces, the Fed pulled the trigger on an as-expected 25-bps rate hike this past week. The Fed’s fresh Summary of Economic Projections (SEP, aka “dot plot”), moreover, reflects that the hike is likely not a “one-and-done”. The median projection for end-2026 shows another 25-bps hike before a holding period throughout 2027 to be followed by a few cuts in 2028-2029. The longer-run level for the appropriate fed funds rate was marked up from 3.0625 to 3.25%. The market, in comparison (as of midday Thursday), prices for just shy of three 25-bps hikes by September 2027. The week ahead is relatively light on economic data but offers a plethora of Fedspeak.

ADP Weekly Employment Change: This 4-week moving average measure has bounced mildly higher since August and tracks close to the running average of the past two years.

Mortgage Applications: The headline weekly index for the week ending September 11th fell 4.1%. Refis again overwhelmingly led the decline, due to higher rates.

S&P Global US Activity: The preliminary September report will reveal if expansion holds, as August’s report portrayed both manufacturing and services in expansion territory.

Initial & Continuing Jobless Claims: Initial claims for the week ending September 5th dropped by 10K, likely impacted somewhat by the holiday, with the 4-week moving average ticking 2.75K lower. Continuing Claims dipped by a notable 39K. This dataset’s steady trend has been noted by Fed Chair Warsh in recent comments.

New Home Sales: Sales for August are forecast to tick higher MoM by 1.3%, following a notable July decline in which inventories and months’ supply increased.

Building Permits: The final release for August will follow a surprising rise in July. Permits improving while housing starts weakened suggests that builders continued to secure rights but remained cautious on actual ground-breaking amid elevated mortgage rates and overall softer housing demand.

Durable Goods Orders: The preliminary report for August appears likely, as in July, to be consistent with a modestly expanding manufacturing sector but with less-than-robust capital spending.

University of Michigan Sentiment: The September-final release will follow last week’s dour preliminary report in which both current conditions and future expectations deteriorated from August. In a bad omen inflation-wise, expectations for 1-year and 5-year ahead both ticked higher from the month prior.

Federal Reserve Bank Member Appearances: 

• 9/18/2026 09:30 Fed’ Vice Chair Bowman speaks on Bank Stress Tests from London event.
• 9/18/2026 11:45 Kansas City Fed President Schmid speaks on payments and banking at Community Bankers of Colorado convention.
• 9/21/2026 16:30 Chicago Fed President Goolsbee addresses monetary policy at Official & Financial Institution Forum in London.
• 9/22/2026 10:05 NY Fed President Williams gives keynote remarks at US Treasury Market Conference in NYC.
• 9/24/2026 08:50 Cleveland Fed President Hammack delivers opening remarks at Cleveland Fed Inflation Conference.
• 9/24/2026 10:10 Philadelphia Fed President Paulson speaks at annual fintech conference.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$92bln; $79bln	9/21 -- 9/24
6-Week	$75bln	9/22 -- 9/24
Notes	Offering Amount	Auction Date -- Settle Date
2-Year; 5-Year	$69bln; $70bln	9/22; 9/23 -- 9/30
7-Year	$44bln	9/24 -- 9/30
Bonds/FRNs	Offering Amount	Auction Date -- Settle Date
1-Year 10-Month	$28bln	9/23 -- 9/25

Key Market Trends

Source: Bloomberg. Fed Chair Warsh twice in the last three weeks, at the Jackson Hole Central Banker Symposium and at this past week’s post-FOMC press conference, specifically cited financial conditions as not being tight. At the post-meeting presser, he stated, “I am hard-pressed to call financial conditions restrictive.” And this view was widely shared by the FOMC. While a current homebuyer may disagree, financial conditions overall are indeed far from tight territory, at least as seen here in the Bloomberg Financial Conditions Index, which tracks the overall level of financial stress in the U.S. money, bond, and equity markets to help assess the availability and cost of credit. A positive value on the index indicates accommodative conditions. Rates may be higher, but funding availability exists, and stress is low. Essentially, this indicator was not a “yellow light” for implementing a rate hike.

Source: FHLBNY. Fed Chair Warsh, in this post-FOMC meeting press conference, also specifically noted elevated commodity prices as a contributing factor to inflationary forces and a dynamic that the Fed is monitoring. He delicately attributed these forces to “geopolitics.” In other words, the Mideast and Ukraine conflicts have impacted commodity prices and supply chains, dynamics that the Fed cannot exert much influence over. As can be seen here, commodity prices have re-elevated since early summer. While the rise in energy sector prices is well-known, agriculture sector prices have also posted a notable rise, as seen here in the Bloomberg Commodity Index’s Agriculture sub-index; this rise could present further supply-side upward pressure on food prices.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve had bear flattened from the week prior, with the 2-year’s 11-bps increase leading the move. Such a move is typical into and directly following a fresh Fed hiking cycle, and the market has priced a slightly more aggressive hiking path than that of the Fed’s dot plot. The Fed’s direct and stringent comments on inflation appear to have put a lid, for the moment at least, on the recent upswing in longer-tenor yields. On Thursday afternoon, the 10-year had retreated from the 5%-plus yield zone. The market currently prices a ~59% chance of a 25-bps hike at the October 28th FOMC. The year-end forward, 4.21%, equates to 1.33 25-bps hikes. The peak forward is September of next year; at 4.615%, it equates to just shy of three 25-bps hikes and is above the Fed’s dot plot median peak of 4.125%.

Source: Bloomberg. As mentioned in the previous section, the housing sector remains in the doldrums both outright and on a relative basis. As seen here, the latest National Association of Homebuilders Index, released this past week, tied its lowest level since 2022, with a sharp decline in future sales expectations and increased use of incentives to clear inventory. Also released this week were dour results for both August housing starts and building permits. The notable rise in mortgage rates, shown here piercing the 7% line on the 30-year, has clearly been a factor impacting affordability, buyer traffic, sentiment, and activity.

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning, and relative to a week ago, rates were notably higher. The 1-week to 6-month zone was 12 to 15 bps higher, while Overnight was up by 27 bps. The primary catalyst for the move, naturally, was the Fed hike, and that maturities have crossed further into the projected timeline of hikes. Also in the mix was modest upward pressure on our funding spreads, as the Fed being “in play” has led investors to shorten WAM and/or demand higher spreads on short paper. 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, has 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 has helped subdue some of the volatility witnessed this past summer in T-bill and our spreads (in relation to the swaps curve). The September 15th corporate tax date passed with minimal impact. Net Bill supply is expected to turn positive again in October, and so the calmer conditions could be challenged at that time. SOFR, for now, appears likely to trade near or just shy of the Fed’s 3.90% IORB rate.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, bear flattened from a week ago. The 2- and 5-year rose by 10 and 3 bps, respectively. The 10-year declined by two bps. Please refer to the previous section for color on market dynamics and changes.
• On the UST term supply front, the upcoming week serves a slate of 2/5/7-year 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.