After three consecutive weeks of declines, interest rates reversed course last week as labor market resilience surprised to the upside. Stronger-than-expected jobs data has cooled expectations of near-term Fed cuts, with markets now assigning just a 5% probability of a move in July.
Economic Data Recap
- Nonfarm Payrolls: +147K (vs. +106K expected), unemployment down to 4.1% from 4.2%
- JOLTS Job Openings: Jumped to 7.77M (vs. 7.30M forecast)
- ISM Manufacturing: Beat at 49.0 (vs. 48.8 expected)
- ISM Services: Re-entered expansion at 50.8
- Initial Jobless Claims: 233K—better than forecast
These reports underscore continued labor market stability, pushing yields higher and reinforcing the Fed’s wait-and-see stance.
This Week’s Focus
- FOMC Minutes (Wednesday): Will provide insight into how policymakers are balancing disinflation trends with strong labor conditions.
- Tariff Negotiations: The July 9 deadline marks the end of the 90-day pause. Expect headline risk as global trade partners respond to new U.S. tariff proposals.
- Treasury Auctions: Scheduled Tuesday through Thursday, with investor demand under watch.
Rate Path Outlook (WIRP Update)
- Today: 2 rate cuts priced in by year-end
- 30 Days Ago: 2.20 cuts
- 60 Days Ago: 2.75 cuts
The trajectory is flattening as stronger data tempers expectations for aggressive easing.
Borrower Strategy
- Floating-Rate Borrowers: Maintain short-duration hedges. Cap pricing remains favorable, and flexibility is increasingly valuable.
- Fixed-Rate Borrowers: Watch the 10-year closely. A small window may reopen in Q3 for opportunistic execution.
- Market Activity: Transaction volume accelerated in June, with balanced refi and sale activity and growing lender participation from regionals and the Agencies.
While this week is lighter on data, the combination of policy signals and trade headlines could shape the next phase of rate and credit sentiment.
Luke Fuller, Director
Luke Fuller is the Director of Capital Markets at Defease With Ease | Thirty Capital, bringing 10+ years of experience in debt structuring, interest rate risk management, and capital markets execution for CRE investors. With expertise in securitization, derivative hedging strategies, and structured finance, he focuses on optimizing debt portfolios and mitigating market risk through advanced financial modeling and analytics. Luke has extensive experience in CMBS, agency, and balance sheet lending, structuring financial instruments, and executing transactions across multiple asset classes. He has advised investors, private equity firms, and REITs on interest rate derivatives, yield curve analysis, loan restructuring, and portfolio risk assessment. Previously, Luke worked at Colliers providing advisory services to industrial brokers.
