Last week’s labor data showed further cooling beneath the surface. While headline job growth looked stable, most gains came from a few sectors, and excluding healthcare, employment is shrinking. Unemployment continues to drift higher, participation gains aren’t converting into jobs, and layoffs are accelerating. Markets quickly repriced: the odds of a December Fed cut jumped from 38% to 75%, pushing rates about 10 bps lower and driving a bull steepening in the curve.
Short-end funding stress persists, with 1-month SOFR trading above overnight, reflecting expectations for month-end liquidity pressure and the potential for elevated repo rates. Into a thin holiday week, this increases the risk of outsized rate volatility.
Hedging demand remains driven by lender requirements, but 2–3-year swap tenors continue to offer the best value—though already pricing in several 2025 cuts. Borrowers with flexibility are generally keeping hedges shorter to preserve optionality in the event of deeper-than-expected easing.
Refinancing activity has picked up slightly, as borrowers view current SOFR levels as an acceptable entry point. Lenders are selectively offering longer-term executions again, including isolated 10-year full I/O deals.
Washington is expected to remain muted through year-end. With markets closing for Thanksgiving and liquidity evaporating after Wednesday afternoon, any trades or hedges needed before month-end should be executed early this week.
Jake Tillman, Senior Analyst
Jake Tillman is a Senior Analyst, Capital Markets at Defease With Ease | Thirty Capital, bringing 5+ years of experience specializing in financial modeling, debt structuring, and risk analysis for CRE transactions. He supports the execution of financing strategies, including CMBS, as well as interest rate hedging and capital markets transactions. With expertise in cash flow modeling, credit risk assessment, and market analytics, he provides data-driven insights to optimize capital structures and manage interest rate exposure. Jake assists in scenario analysis, transaction execution, and risk assessments, ensuring alignment with market conditions and client objectives. His technical background includes financial modeling, Bloomberg analytics, and structured finance evaluation.
