Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending October 9, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
10/13/26 6:00	NFIB Small Business Optimism	Sep	98.00	98.70
10/13/26 10:00	Existing Home Sales	Sep	3.96m	3.98m
10/14/26 7:00	MBA Mortgage Applications	9-Oct	--	-4.20%
10/14/26 8:30	CPI MoM	Sep	0.60%	0.40%
10/15/26 8:30	Retail Sales Advance MoM	Sep	0.30%	1.20%
10/15/26 8:30	Initial Jobless Claims	10-Oct	--	197k
10/15/26 8:30	PPI Final Demand MoM	Sep	0.50%	0.40%
10/16/26 8:30	New York Fed Services Business Activity	Oct	--	-8.70
10/16/26 9:15	Industrial Production MoM	Sep	0.40%	0.00%
10/16/26 9:15	Capacity Utilization	Sep	76.40%	76.30%

Economic data this past week was on the lighter side and relatively uneventful market-wise. The FOMC Minutes for last month’s meeting were released this week and revealed that, while another hike appeared likely before yearend, it was not necessarily urgent to hike and will depend on incoming data. The probability of a hike at the October 28th meeting, therefore, has subsided from previously higher odds. The holiday-shortened week ahead carries a set of important inflation barometers and offers a handful of Fed speakers as well.

NFIB Small Business Optimism: The fresh survey follows last month’s report, which portrayed generally steady conditions, albeit a slight decline in expectations and sales.

Existing Home Sales: The consensus forecast is for a .3% MoM dip, following a 2% decline last month, as elevated rates continue to pose a challenge to homebuying. Prices were up modestly YoY, but inventory has notably increased and thereby may gradually provide buyers more bargaining power.

Mortgage Applications: Keeping its recent trend intact and led by refis, the headline index for the week ending October 2nd fell 4.2%. Any notable improvement this week appears unlikely.

Consumer Price Index (CPI): The consensus call is an increase in both MoM and YoY headline inflation barometers. The core figure is forecast to increase YoY by .1% but decrease .1% MoM. This report could prove influential to market pricing and the upcoming October 29th FOMC decision.

Retail Sales: Last month’s report for August indicated that consumer spending strengthened considerably after a soft July, thereby revealing a resilient consumer sector. Well-off population cohorts, in addition to declining personal savings rates, have underpinned spending. The September data is forecast to rise again but at a much less pronounced level.

Initial & Continuing Jobless Claims: Initial claims for the week ending October 3rd dropped by 2K, with the 4-week moving average ticking 2.5K lower. Continuing claims rose by 17K. This dataset’s steady trend has served as high-frequency evidence of relative labor market stability.

Producer Price Index (PPI): The report on wholesale inflation trends is expected to register a .1% MoM increase on both the headline and core readings.

New York Fed Services Business Leaders Activity: October’s NYC-region survey will reveal if there is any improvement to last month’s weaker-with-elevated-prices report.

Industrial Production and Capacity Utilization: Last month’s report for August indicated modest growth, and the September report is expected to do likewise but with some improvement via a .3% MoM rise in production and a .2% MoM increase in the utilization rate.

Federal Reserve Bank Member Appearances: 

• 10/12/2026 12:10 Cleveland Fed President Hammack speaks at NABE Annual Conference.
• 10/13/2026 16:00 Boston Fed President Collins speaks at Annual Regional & Community Banking Conference.
• 10/14/2026 14:00 Fed releases Beige Book covering economic trends across districts for late-summer through September.
• 10/15/2026 16:30 Cleveland Fed President Hammack participates in discussion at Women’s Trading Network event.
• 10/15/2026 23:30 Fed President Warsh participates in fireside chat at the IMF’s Fall meeting in Bangkok.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$95bln; $82bln	10/13 -- 10/15
6-Week	$85bln	10/13 -- 10/15
Notes	Offering Amount	Auction Date -- Settle Date
No scheduled Note offerings.
Bonds/FRNs	Offering Amount	Auction Date -- Settle Date
No scheduled Bond offerings.

Key Market Trends

Sources: FRB-NY; FHLBNY. Shown here are a few tidbits from the NY Fed’s September Survey of Consumer Expectations (SCE), released this past week. A monthly set of “soft” data, the SCE is a cousin of sorts to the University of Michigan Consumer Sentiment Report which, coincidentally, will post its preliminary October readings near when this publication hits your inbox on Friday. The stubborn nature of inflation trends was evident in the latest report, as both 1-year-ahead (shown here) and 3-year-ahead expectations rose by .3 and .1%, respectively, from the month prior. Indeed, the 1-year-ahead reading was the highest since May 2023. The Fed monitors inflation expectations because of their potential to impact economic and pricing behavior. The latest SCE also revealed a somewhat surprising uptick in respondents’ probability of moving within a year’s time. Given the upward move in rates this year, the home/mortgage lock-in effect has severely dampened mobility and mortgage activity, and so this uptick may provide glimmers of hope and/or a bottom. For perspective, however, the long-term (June 2013-on) average of 17.3 is well above the latest reading of 14.25.

Source: JP Morgan. Here, in this view of outstanding 30-year conventional loans (LHS, $bn) by WAC (bottom-axis, %) and vintage, can be seen the main reason for the mortgage and home lock-in dynamic. The rise in rates this year has pushed new primary mortgage rates (7.386% here, but Optimal-Blue 30-year Conforming Index posting at 7.43% on Thursday morning) well above that of existing loans, thereby reducing incentive to move to a new home. Moreover, at current primary mortgage rates, overwhelmingly most of the mortgage universe is out-of-the-money for refinancing; indeed, assuming a 50-bps incentive to refinance, only ~.5% currently possess that incentive. Markets-wise, as we mentioned last week, this prevailing condition should temper further duration and negative convexity hedging (pay-fixed swaps and selling USTs) among mortgage investors, since the mortgages and MBS have dramatically extended already in the past month.

Source: Bloomberg. Here we can clearly see the impact of the higher-rates climate and lock-in effect. The notable ~150 bps rise in consumer mortgage rates has dealt a blow to housing and mortgage activity, as seen here in the downtrend in the Mortgage Bankers Association Purchase and Refi indices since wintertime. The downtrend is most pronounced and steady in the past six weeks and been led by refinancings.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was modestly lower from the prior Thursday. Market-moving events were relatively minimal, with yields range-trading and reacting to Mideast pronouncements and/or oil market news. The market currently prices a 19% chance, down from 29% last week, of a 25-bps hike at the October 28th FOMC. The 2026 year-end forward, 4.125%, is down a slight 1.5 bps from a week ago and equates to just shy of one 25-bps hike before yearend. The peak forward remains October of next year; at 4.655%, it is ~4.5 bps lower than last week and equates to ~3.1 25-bps hikes; note also that it is still well above the Fed’s dot plot median peak of 4.125%. Markets will likely focus on the upcoming CPI report for direction.

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning, and relative to a week ago, short tenors were mixed, with the 1-month-and-in sector up to 9 bps higher and 2-month-and out flat to down a few bps. However, as of this writing early afternoon Thursday, levels were moving higher and notably so in the 1-month-and-in sector. The dynamics of net-positive T-Bill supply, Money Market Funds (MMFs) shortening WAM with the Fed in play, and investors demanding higher premiums in the short-end have conspired to widen Bill spreads, and, in turn, our funding spreads to the SOFR curve (please refer to last week’s publication for more granular color). Consequently, our advance rates have been impacted even though Fed-hike probabilities are about the same as a week ago. In terms of overnight financing 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 very short-term liquidity. Indeed, these financing conditions have been tranquil enough that the Fed has paused its RMP until further notice, and SOFR remained at or below IORB in the past week.
• Net T-Bill supply will remain positive in the upcoming week. 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 short-tenor advance levels. While we hoped last week that the indigestion-impact of this supply was now fully priced into paper, it is clear from this past Thursday’s price action that that is not yet the case. This space will be one to monitor. SOFR, meanwhile, appears likely to continue to trade at 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, was a modest 1 to 2 bps lower from the week prior. Please refer to the previous section for color on market dynamics and changes.
• On the UST term supply front, the upcoming week serves a respite from 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.