Member Services Desk
Weekly Market Update

This MSD Weekly Market Update reflects information for the week ending April 11, 2025.

Economist Views

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The economic calendar will be busy this coming week. Updates on retail sales, industrial production, and new residential construction activity in March will allow economists to refresh projections for Q1 real GDP growth. The median consensus projection calls for a 1.1% annualized advance, following the 2.4% gain witnessed in Q4, but the range of projections remains wide. Of note, the Federal Reserve Bank of Atlanta’s tracking estimate, which has come closest to the Bureau of Economic Analysis’ advance estimate in recent quarters, anticipates a .8% annualized decline after adjusting for differing treatments of gold transactions from the monthly merchandise trade reports. A quintet of Federal Reserve officials, but only one FOMC voter, are scheduled to make public appearances.

Empire State Manufacturing Survey: Manufacturing in New York State likely contracted further in early April, although the general business conditions diffusion index – the percentage of respondents witnessing an increase in activity less those experiencing a decline – probably improved from the -20% reading posted in the prior month.

Retail & Food Services Sales: Powered by a tariff-induced surge in vehicle purchases, sales probably jumped by 1.5% in March – the largest single-month gain since January 2023. Tipped off by the already reported leap in unit purchases, auto-dealer revenues likely jumped by 8.9% during the period, erasing the 4% falloff witnessed over the January-February span. Excluding autos, a tug of war between a price-led drop in gas station receipts and stepped-up activity at other outlets likely left retail sales .2% lower after a .3% prior-month uptick. As always, monitor so-called “control” sales, excluding auto, building materials, and gas purchases in the report for clues to the pace of consumer spending during Q1. Barring any prior-month revisions, a solid .8% gain would place core purchases over the first three months of the year 2.3% annualized above their October-December average, following a solid 4.8% annualized Q4 gain.

NY Fed Services Business Activity: Echoing the anticipated weakness in its manufacturing barometer, the gauge of services activity across New York State, northern New Jersey, and southwestern Connecticut likely remained in contractionary territory for a seventh consecutive month, although it probably improved from the abysmal -19.3% reading recorded in March.

Industrial Production & Capacity Utilization: Pared by a weather-related decline in utilities output, industrial production likely declined by .3% in March, reversing almost half of February’s surprising .7% gain. With output falling short of additions to productive capacity during the reference period, the overall operating rate probably moved three ticks lower to 77.9%.

NAHB Housing Market Index: Dampened by concerns about the impact of higher tariffs on construction costs, sentiment probably eroded further in early April, leaving the National Association of Home Builders’ confidence gauge at a 17-month low of 35.

 Jobless Claims: Despite growing fears of an imminent deterioration, labor market conditions probably were little changed during the filing period ending April 12, with initial claims for unemployment insurance benefits remaining in a historically low 220K-230K range. The total number of persons receiving regular state benefits probably registered below 1.9mn again during the week ended April 5, implying that recent job losers can find work. Monitor separate federal worker figures for signs that Department of Government Efficiency layoffs have occurred.

Housing Starts & Building Permits: Unusually favorable weather conditions likely propelled both measures above their respective SAARs of 1.5mn and 1.46mn recorded in February.

Federal Reserve Appearances:

• Apr. 14  Atlanta Fed President Bostic to speak in a moderated conversation about monetary policy in Atlanta.
• Apr. 16  Cleveland Fed President Hammack to speak on “Fed 101” in a moderated Q&A at an event in Columbus, OH.
• Apr. 16  Kansas City Fed President Schmid to chat with Dallas Fed President Logan on the economy and community banking.

Key Market Trends

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CHART 1 UPPER LEFT and CHART 2 UPPER RIGHT
Source: Bloomberg, National Bureau of Economic Research and FHLB-NY. Notes: Blue-shaded areas denote recessions; orange-shaded area highlights the current economic expansion. Shown here is the Bloomberg Financial Conditions index and some of its components. Please note that data is as of Wednesday night and, given current market dynamics, highly subject to change. This index tracks the overall level of financial stress in the U.S. money, bond, and equity markets to help assess the availability and cost of credit. A positive value indicates accommodative financial conditions, while a negative value indicates tighter financial conditions. Reflecting ongoing concerns about the adverse effects of a global trade war, conditions have tightened considerably since the March 19 Federal Open Market Committee (FOMC) meeting. Indeed, markedly lower stock prices, combined with generally wider fixed-income spreads and heightened rates and equity market volatility, have left the Bloomberg U.S. Financial Conditions Index 0.79 standard deviation (“sd”) below neutral as of Wednesday night, down from 0.27 sd above neutral at the last FOMC. With the recent tightening, financial conditions stand at their least accommodative level since September 2022. It should be noted that the index had declined to -1.6 before midday Wednesday’s “tariff partial pause” spurred a rebound. As of midday Thursday, with stocks re-faltering and volatility and spreads rising, the index appears to be on course to decline again. While the statement issued after the March FOMC meeting made no explicit mention of financial conditions, it did reiterate that policymakers’ appraisals of the appropriate stance of monetary policy will consider a wide range of information, including readings on labor market conditions, inflation pressures, and expectations, and financial and international developments. In this light, surely the Fed, while in “wait and see” mode, will monitor these dynamics and financial condition metrics.

CHART 3 LOWER LEFT
Source: Bloomberg. Top pane is yield (LHS, %); bottom pane is change (LHS, bps). As of Thursday afternoon, the UST term curve was notably higher and steeper in a wild week of news and market moves. The 2, 5, 10, and 30-year tenors are higher by, respectively, 22, 30, 37, and 40 bps from last Thursday. Naturally, everything is fluid and driven by tariff news. Wednesday afternoon’s tariff “partial pause” enabled yields to decline from even loftier levels. For instance, the 10-year UST had breached 4.50% mid-week beforehand. While the liquidation in stocks, bonds, and credit may have calmed somewhat, financial condition metrics are tighter than a few weeks ago, per the above color. As of Thursday afternoon, the market prices end-2025 fed funds ~3.44%, or 3 bps higher than a week ago, which equates to ~3.6 25-bps Fed cuts. The market’s end-2026 forward is ~3.19%, or 13 bps higher than a week ago.

CHART 4 LOWER RIGHT
Source: Bloomberg. Here is a view, as of Thursday afternoon, of financial conditions in the form of MBS yields (White, RHS-1, %) and spreads (Gold, RHS-2, bps), both of which have notably risen in the past week via the market’s reaction to spiking trade policy uncertainty (Green, LHS). Since April 3, the 30-year MBS Current Coupon (computed yield of par-priced security) has risen by over 40 bps, driven in part by the ~10 bps widening of mortgage spreads. These moves will, in turn and due course, impact mortgage rates for homebuyers.

FHLBNY Advance Rates Observations

Front-End Rates

• As of Thursday afternoon, short-end rates were mixed, and the curve was flatter vs. a week ago. The 3-month-and-in sector was 1 to 8 bps higher, led by the Overnight, while the 4- to 6-month sector was 2 to 6 bps lower, led by the 6-month. The shortest tenors experienced impacts from lingering tighter overnight repo markets as well as some widening of credit spreads amidst the tariff drama. As of this writing, after the tariff partial pause, these dynamics had cooled from their most severe on Wednesday. Meanwhile, the market’s repricing of potential Fed cuts this year spurred downward movement in the longer tenors. Despite some wavering this week, robust Money Market Fund AUM levels have helped underpin demand for short-end paper. Also helpful is that net T-bill supply has been negative in recent weeks, owing to debt ceiling dynamics. But with the April 15th tax date quickly approaching, MMFs and bank deposits may be susceptible to withdrawals in the near-term.
• The market will focus on economic data and further trade policy news in the upcoming week.

Term Rates

• The longer-term curve, generally mirroring moves in USTs and swaps, was mostly higher and steeper from the week prior. The 2- to 5-year was roughly 15 to 28 bps higher, while the 10-year was ~35 bps higher. Kindly refer to the previous section for color on market dynamics and changes. Given the highly volatile environment, we encourage members to engage with the Member Services Desk for current rate levels and market dynamics.
• 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.

Price Incentives for Advances Executed Before Noon: In effect as of Tuesday, September 5, 2023, the FHLBNY is pleased to now offer price incentives for advances executed before Noon each business day. These pricing incentives offer an opportunity to provide economic value to our members, while improving cash and liquidity management for the FHLBNY. For further details, kindly refer to the Bulletin.