The past week’s economic reports were weighted towards the employment side of the Fed’s dual mandate, and they generally portrayed a labor market that, while not dynamic, has perhaps established a firmer footing. The “big kahuna” of labor market data, namely the Bureau of Labor Statistics’ monthly jobs report, will be released after this edition went to press and will provide further context on employment conditions. Inflation data, meanwhile, has remained elevated and fortified the Fed’s “on hold” posture. The Mideast situation remains fluid, and any meaningful developments could move the rates market. For now, markets are pricing in greater odds of a Fed rate hike by early-2027. Looking forward to next week, the inflation reports should highlight the data slate...

Back by popular demand, Frank Farone, Managing Director of Darling Consulting Group, returns to join us once again for an informative session focused on Liquidity and Asset/Liability Management. Frank will address key challenges and provide actionable strategies to help FHLBNY members stay resilient and take advantage of the new rate environment now and in the months/years to come.

We are now experiencing a “higher for longer” phase in the interest-rate cycle, accompanied by an inversion in the short-to medium terms followed by a steepening (see following chart). The Fed is still in a restrictive posture, but market expectations indicate a near-term easing, however, uncertainty surrounding the potential of future heightened growth leading to elevated inflation is causing steepening at the longer-end of the curve…