Member Services Desk Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending October 16, 2026.

Economist Views

THIS WEEK'S ECONOMIC CALENDAR HIGHLIGHTS
Date Time	Event	Period	Survey	Prior
10/20/26 8:15	ADP Weekly Employment Change	3-Oct	--	24.750k
10/20/26 8:30	Housing Starts	Sep	1,305k	1,275k
10/20/26 8:30	Building Permits	Sep P	1,385k	1,403k
10/20/26 10:00	Pending Home Sales MoM	Sep	0.50%	0.30%
10/21/26 7:00	MBA Mortgage Applications	16-Oct	--	-2.70%
10/22/26 8:30	Initial Jobless Claims	17-Oct	--	199k
10/22/26 8:30	Initial Claims 4-Wk Moving Avg	17-Oct	--	198.50k
10/22/26 10:00	Leading Index	Sep	--	-0.10%
10/23/26 9:45	S&P Global US Manufacturing PMI	Oct P	--	55.90
10/23/26 9:45	S&P Global US Composite PMI	Oct P	--	58.40

Except for housing-related data, economic reports this past week were mostly higher than expectations, led by the inflation and retail sales updates for September. Refer to the next section for further color on the inflation reports. The probability of a hike at the October 28th meeting, in turn, has ticked higher from a week ago to ~30%. The week ahead offers another set of housing-related reports but is devoid of higher-profile data. Fed Chair Warsh was scheduled to speak at the Bangkok IMF meeting in Bangkok at 11:30pm EST the night before this publication hits inboxes, so there is some potential for market-moving comments from this last event before the onset of the pre-FOMC meeting blackout.

ADP Weekly Employment Change: Data for the week ending October 10th will reveal if September’s improved trend of 24K-ish gains, vs. 12K-ish in August, has been sustained.

Housing Starts: The September data is forecast to rebound from the month prior’s 2.6% MoM multifamily-led decline.

Building Permits (Preliminary): Following August’s 2.1% MoM decline, the September preliminary release is forecast to dip 2% MoM and thereby reflect further moderation in the sector.

Pending Home Sales: The National Association of Realtors’ report for September is expected to modestly improve on August’s dour data. Sales in August rose .3% MoM in August, indicating a slight pickup, but registered at 4.7% below year-ago levels. Given this report’s leading indicator status, it will be closely tracked as a housing market barometer. Notably and perhaps a bad omen, Redfin’s Pending Home Sales report released this past week registered a hefty 4% decline in September from August.

Mortgage Applications: Maintaining the recent trend and led this time by purchases, the headline index for the week ending October 9th fell 2.7%. Any notable improvement this week appears unlikely.

Initial & Continuing Jobless Claims: Initial claims for the week ending October 10th rose by 1K, with the 4-week moving average ticking .25K higher. Continuing Claims fell by 4K. This dataset’s continuing steady trend has served as high-frequency evidence of relative labor market stability.

Leading Economic Index (LEI): The Conference Board’s index dipped a slight .1% MoM in August. Overall, the August report indicated continued economic expansion but weaker consumer expectations, which could contribute to moderating yet still positive economic growth.

S&P Global Business Activity (Preliminary): The preliminary survey report for October will follow a sturdy September report in which the Composite, Manufacturing, and Services indices each posted MoM increases and were all in the above-50-reading expansion zone. Cost and supply pressures were an increasing concern and are poised to reappear in the fresh report.

University of Michigan Consumer Sentiment (Final): The October final release will serve to alter or confirm the dour results of the last week’s preliminary report. The preliminary report portrayed deteriorating sentiment on both current conditions and expectations, and it revealed an uptick in both short- and long-term inflation expectations.

Federal Reserve Bank Member Appearances:  The Fed will be in blackout mode prior to its October 28th meeting and decision.

UPCOMING WEEK'S US TREASURY AUCTIONS
Bills	Offering Amount	Auction Date -- Settle Date
4-Week; 8-Week
13-Week; 26-Week	$95bln; $82bln	10/19 -- 10/22
6-Week	$95bln	10/20 -- 10/22
Notes	Offering Amount	Auction Date -- Settle Date
No scheduled Note offerings.
Bonds/FRNs/TIPs	Offering Amount	Auction Date -- Settle Date
19-Year 10-Month	$13bln	10/21 -- 10/23
5-Year	$26bln	10/22 -- 10/30

Key Market Trends

Source: Bloomberg. The highlight data release of the past week was Wednesday morning’s Consumer Price Index (CPI) report. With both headline and core measures higher than consensus forecast, the report revealed persistent pressures. Indeed, at 3.738% YoY, the headline reading remains well above the Fed’s 2% goal. Importantly, as seen here, the persistent pressure is not just fuel and energy-related. Services continue to contribute the bulk of the elevated readings. Inflation data is typically “sliced and diced” into various “ex-this, ex-that” and “trimmed” versions to provide varied context on the inflation backdrop, but the general takeaway from all versions is that inflation, while clearly not 1970’s-worrisome, remains on the Fed’s radar for potential further action. Adding grist to the mill was Thursday’s Producer Price Index (PPI) report which revealed elevated wholesale inflation; indeed, the MoM 1.3% headline PPI print was the biggest monthly gain since March 2022.

Source: Bloomberg. As seen here in the 2-year swap’s behavior (5-minute intervals) this past week, the CPI release sparked an immediate spike in yields. Interestingly, the move did not hold, as yields retraced thereafter on apparent position-squaring from trading-type market participants and possible “haven-demand“ from wobbly tech stocks. This episode provides a few relevant observations on market behavior. Firstly, we can see here why we track and make note of when economic data is to be released. Secondly, often these market moves retrace, to varying extents, the same day after the initial announcement. Thirdly, these dynamics may provide opportunities and/or timing guidance for our members for either taking advances or buying securities. Please call the Member Services Desk for updates on data releases and/or related market dynamics.

Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was mostly lower than the prior Thursday. Longer tenors led the move; the 2-year was unchanged, but the 5- and 10-year yields fell by ~8 and ~13 bps, respectively. Recent bond-selling pressure appears to have abated for the moment, as mortgage duration extension has run its course, and higher yields have spurred both demand and position-squaring. The market currently prices a 31% chance, up from 19% last week, of a 25-bps hike at the October 28th FOMC. The 2026 year-end forward, 4.165%, is 4 bps higher than last week and equates to slightly over one 25-bps hike before yearend. The peak forward is September of next year; at 4.64%, it equates to just over three 25-bps hikes; note also that it is still well above the Fed’s September dot plot median peak of 4.125%.

Source: Redfin. This past week, a gloomy update on pending home sales was released by Redfin, and the data may serve as a heads-up for the upcoming week’s National Association of Realtors Pending Home Sales report. Except the pandemic freeze of 2020, Redfin’s September report registered the weakest levels since 2014. Pending sales declined in all major metro areas. Moreover, 14.5% of purchase contracts were canceled, the highest share in its historical database. The total supply of homes for sale rose to its highest level since March 2020, and price gains decelerated; at least these trends might provide a bit of relief to buyers amid the imposing challenges of higher rates and affordability constraints.

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday morning, and relative to a week ago, short tenors were mostly unchanged 1-month-and-in but 4 to 7 bps higher, owing to higher Fed-hike pricing, in the 2- to 6-month sector. However, as of this writing noon Thursday and in déjà vu fashion to last week, levels popped notably higher by 7 to 9 bps in the 2-month-and-in sector. Again, poor late-morning 4- and 8-week T-bill auctions proved the culprit. 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 call the Member Services Desk and/or refer to recent publications for further color). 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 had hoped that the indigestion-impact of this supply was now fully priced into paper, it is clear from this past week’s recurring widening episode that is not yet the case and that clarity on Fed action will help conditions. 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 mostly lower from the week prior. The 2-, 5-, and 10-year declined by 2, 9, and 13 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 5-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.