Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending October 2, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
10/5/26 9:45	S&P Global US Services PMI	Sep F	--	58.70
10/5/26 10:00	ISM Services Index	Sep	55.00	55.40
10/6/26 8:15	ADP Weekly Employment Change	19-Sep	--	20.000k
10/7/26 7:00	MBA Mortgage Applications	2-Oct	--	-6.00%
10/7/26 14:00	FOMC Meeting Minutes	16-Sep	--	--
10/7/26 15:00	Consumer Credit	Aug	$15.000b	$18.062b
10/8/26 8:30	Initial Jobless Claims	3-Oct	--	197k
10/8/26 8:30	Initial Claims 4-Wk Moving Avg	3-Oct	--	200.00k
10/8/26 10:00	Wholesale Trade Sales MoM	Aug	--	0.80%
10/9/26 10:00	U. of Mich. Sentiment	Oct P	48.00	48.10

Economic data this past week generally portrayed activity and growth to be “holding up,” with consumer spending being underpinned by the wealth effect on well-off population cohorts and by lower personal savings rates. Meanwhile, elevated price pressures remain stubborn. Fedspeak was on the mildly hawkish side this past week, as another rate hike remains a distinct possibility for this year. The monthly jobs report, to be released just prior to this edition hitting inboxes, may spark some market movement and will conclude the week’s data blizzard. The week ahead is light on economic data but offers a handful of Fed speakers. Also, the release of last month’s FOMC Minutes should reveal insights on the Fed’s rate-hike decision and the potential path forward.

S&P Global US Purchasing Manager Indices: This release is the final version of the “flash” report released back on September 23rd. The stronger-than-expected preliminary results sparked an increase in yields, and so the final reading will reveal if the results are confirmed.

ISM Services Report: The data for September will reveal if the prior month’s modest acceleration in activity persists. Indeed, the composite index has sustained and above-50 expansion-zone reading throughout this year and is forecast to post a relatively steady reading.

ADP Weekly Employment Change: Given that this past week’s ADP monthly reading for September revealed solid improvement (90K) from the summer months, it would seem likely that this reading for the week ending the 19th would at least maintain or slightly beat the prior week’s 20K posting.

Mortgage Applications: Unsurprisingly, given higher rates, the headline index for the week ending September 25th fell 6%. Any notable improvement this week appears unlikely.

FOMC Minutes: FOMC Meeting Minutes from the September gathering will be released and provide context on the Fed’s decision to raise the policy rate.

Consumer Credit: The data will reveal if July’s 4.6% annualized pace of acceleration, led by non-revolving credit, was maintained in August.

Initial & Continuing Jobless Claims: Initial claims for the week ending September 26th dropped by 1K, with the 4-week moving average ticking 2.5K lower. Continuing Claims rose by 11K. This dataset’s steady trend has been noted by Fed Chair Warsh in recent comments as high-frequency evidence of relative labor market stability.

University of Michigan Consumer Sentiment: The October preliminary release will follow a dour September report, which portrayed weakening sentiment and elevated inflation expectations.

Federal Reserve Bank Member Appearances: 

• 10/02/2026 10:00 Dallas Fed President Logan delivers welcome remarks at Dallas Fed-sponsored research workshop.
• 10/06/2026 09:05 NY Fed President Williams moderates panel at NY Fed Governance & Culture Reform Conference.
• 10/06/2026 19:00 Dallas Fed President Logan moderates panel at Dallas Fed-sponsored Global Perspectives Series.
• 10/08/2026 13:40 St. Louis Fed President Musalem speaks at Bloomberg event on US economy and policy.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$95bln; $82bln	10/5 -- 10/8
6-Week	$85bln	10/6 -- 10/8
Notes	Offering Amount	Auction Date -- Settle Date
3-Year	$58bln	10/6 -- 10/15
9-Year 10-Month	$39bln	10/7 -- 10/15
Bonds/FRNs	Offering Amount	Auction Date -- Settle Date
29-Year 10-Month	$22bln	10/8 -- 10/15

Key Market Trends

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday close, the UST term curve was mixed and steeper from a week ago, with 5-year-and-in tenor yields declining but longer ones rising again. Wednesday’s somewhat softer-than-expected inflation readings led the market to slightly pare back its pricing of rate hikes. The market currently prices a 29% chance, down from 74% last week, of a 25-bps hike at the October 28th FOMC. The 2026 year-end forward, 4.14%, is down 12.5 bps from a week ago and equates to just over one 25-bps hike. The peak forward remains October of next year; at 4.70%, it is 15 bps lower than last week and equates to ~3.3 25-bps hikes; it is also still well above the Fed’s dot plot median peak of 4.125%.

Source: Bloomberg. For perspective and context on the recent upward move in yields, here can be seen that the 30-year MBS Current Coupon (theoretical par-priced MBS coupon), while dramatically higher thus far this year, trades below its level reached three Octobers ago by ~40 bps. As seen here in the MBS spread-to-UST, the spread was notably wider three years ago than now, a condition that exerted further upward pressure on MBS yields and, in turn, consumer mortgage rates. Moreover, also seen here, implied volatility levels were higher in October 2023 compared to now, and that dynamic contributed to the wider spreads. In today’s markets, while rates and spreads can certainly continue to move higher, there are a few relevant differences from three years ago. For one, yields now are not rising from such a previous low level as early this decade. Therefore, the duration extension and convexity hedging needs now relative to then are not as sizable. Indeed, much of the recent hedging has already been done and was a contributor to the recent spike in yields. With the bulk of the MBS universe not now on the cusp of the refinancing zone, the recent hedging flows will likely dissipate. Also, Autumn-2023 occurred in the wake of a few high-profile bank failures and vast industry holdings of underwater securities which, in some cases, needed to be sold; this dynamic is not currently a factor. While time will tell, the current wider MBS spreads may compel some supportive buying from Fannie and Freddie; not only are valuations more attractive, but both agencies remain under their holdings cap and have been tasked with increasing their purchases.

Sources: US Treasury; JP Morgan. Shown here is recent and prospective weekly net issuance ($bn) of T-Bills. After a respite and month of negative net issuance, the month ahead will flip back to positive, as Treasury fortifies the Treasury General Account (TGA). While not expected to be as lofty as summer issuance, these trends in issuance can have effects on our advance levels, as we explore in more detail below.

Source: Bloomberg. Likely and partly in anticipation of the looming supply, T-Bill spreads have recently widened to the SOFR curve. As seen here (reflected as SOFR swap minus Bill yield), both 3- and 6-month Bills widened (aka cheapened) by ~10 bps from early September. Money Market Funds (MMFs), moreover, have been shortening WAM in the past month or so, given that the Fed is “in play” and a market constantly re-pricing the odds and extent of potential rate hikes. This dynamic has weakened demand and/or led to a higher bogey to buy paper. The widening in Bills leads to widening in our issuance spreads, and, in turn, our short-end advance levels. As can be seen here, the Bill spreads have improved a touch late this week, and so perhaps they have “peaked out”, as in prior widening episodes, and will settle into a more normal range. Kindly call the Member Services Desk to explore this topic in further depth.

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning and relative to a week ago, short tenors were mostly unchanged, except for the 2- and 3-month moving a few bps higher. Refer to the prior section for short-end-relevant color. 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 helped support the space. Indeed, these financing conditions have been tranquil enough that the Fed has paused its RMP until further notice.
• As covered in the previous section, net T-Bill supply is poised to turn positive again in October. 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. But the indigestion-impact of this supply may already be largely priced into yields. SOFR, for now, appears likely to trade near or just shy of the Fed’s 3.90% IORB rate. Indeed, although creeping higher in the past two weeks, Q2-end and a slug of UST settlements this past Wednesday failed to push SOFR over 3.90%. Nonetheless, the supply this month will be a topic to monitor.

Term Rates

• The longer-term curve, as of Thursday afternoon and generally mirroring the moves in USTs and swaps, was mixed and steeper. The 2- and 5-year fell by 12 and 4 bps, respectively, but the 10-year rose by 5 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 3/10/30-year auctions, each settling the next week on the 15th. 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.