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The Treasury market rallied midweek as the 10-year briefly dipped below 4% before rebounding. Despite volatility, both the 2-year and 10-year yields ended just a few basis points lower week-over-week.
Regional bank headlines—centered on alleged fraud and lending irregularities—sparked a brief flight to safety before yields normalized. Meanwhile, SOFR call options jumped as traders priced in aggressive year-end rate cuts. A 3.5% SOFR strike implies roughly 90 bps of easing, which seems optimistic given inflation still above 3%. Borrowers may benefit by locking in fixed rates through swaps, with fixed SOFR trading 60–80 bps below floating.
Even amid the government shutdown, CPI data is expected this week (0.4% headline, 0.3% core). A potential reopening could bring rate volatility as delayed data hits the market.
On the credit side, the agency market remains stable, though reactions to regional bank stress appear overstated. Still, cracks are showing in private credit, and lenders continue to delay closings by one to two weeks. Some borrowers are paying six-figure fees for short-term loan extensions.
Looking ahead, markets are focused on upcoming inflation data, a possible government reopening, and Fed rate cut expectations. Swap spreads remain attractive for hedging, while credit conditions stay tight and execution timelines stretch.
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.
