Last week was relatively quiet on the data front, but Fed Chair Jerome Powell’s Jackson Hole speech took center stage. Powell struck a dovish tone, laying clear groundwork for a September 17th rate cut despite some dissent among Fed governors. Markets are now pricing in an 80–90% chance of a 25 bp move, with expectations that cuts could ultimately bring the terminal rate down toward the low-3% range over the next two years.
Rates eased modestly last week, with swap rates down 6–7 bps across the curve. The yield curve remains steeper than it was heading into the last cutting cycle, with higher long-term rates reflecting a repricing of inflation expectations. On the short end, 1-month term SOFR has started to price in anticipated cuts, now slightly below overnight SOFR.
Labor market data showed further softening, with jobless claims ticking up to 235k, above both forecasts and prior weeks. Early estimates for the upcoming monthly jobs report suggest payroll growth could slow to ~80k, well below recent trends.
Looking ahead, this week brings Treasury auctions, durable goods orders, jobless claims, and key inflation data. Friday’s PCE report (the Fed’s preferred gauge) will be closely watched. Headline PCE is expected to ease to 2.6% YoY, while core remains stickier at 2.9%, still well above the Fed’s 2% target.
On the deal side, activity is skewed toward sales over refinances, with multifamily leading transaction flow. Borrowers are pushing to close deals before Labor Day, taking advantage of current liquidity and aggressive agency activity. In select markets like Denver, however, multifamily supply is weighing on occupancy and rents, with concessions rising.
Bottom line: Powell has opened the door to cuts, the labor market is showing cracks, and markets are bracing for a September move, making this week’s PCE report the key number to watch.
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.
