Rates remained range-bound, with modest easing on the front end while long-term yields continued to drift higher. The 10-year Treasury sits near the middle of its one-year range, consistently finding resistance on rallies and support near the low-4% level, reflecting uneven inflation progress.
The Fed held rates steady and maintained a patient tone, with Chair Powell pushing back on claims that policy is meaningfully restrictive. PPI surprised to the upside, driven by services inflation, while jobless claims remained low, reinforcing labor market resilience and helping explain why long-term yields have not broken lower.
Market activity has been slow to start the year, but demand for distressed property acquisitions is increasing. New floating-rate ARM products with aggressive terms are emerging, creating competitive alternatives to agency floaters and opening the door for select floating-rate executions.
In agency markets, floaters and callables remain the cheapest funding options, while bullet issuance continues to tighten, including recent 5-year bullets trading through Treasuries. Investor demand remains strong for agency zeros in the 2030–2032 maturities despite historically tight spreads.
Looking ahead, expectations center on limited rate cuts (25–50 bps), though strong GDP and inflation risks suggest long-term rates are unlikely to follow lower. Borrower inquiry has increased around higher-coupon 2023–2024 vintage loans, and transaction activity is expected to improve as January closings shift into February. The upcoming jobs data will be key in determining whether front-end rates can move lower or the current range holds.
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.
