The extended still-with-no-end-date Mideast ceasefire/blockade continues to provide a steadier backdrop to markets and limited rate changes, although the situation remains tenuous and spurred further increases in oil prices. Data released over the week was mixed, with labor market data portraying some improvement but inflation measures remaining elevated. As expected, the FOMC kept rates on hold and noted that “inflation is elevated” and “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook”. Inflation was categorized as elevated. The outcome had four dissents, the most since 1992. Three voters supported the rates-on-hold posture but were unsupportive of the statement’s perceived ongoing easing bias. The markets treated FOMC outcome as slightly hawkish and pushed yields higher. Data-wise this upcoming week, the Friday employment situation report will likely be the highlight.

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…