Rates This Week
| Benchmark | Level | Weekly Change |
|---|---|---|
| 10Y Treasury | 4.52% | ↑ 12bps |
| 5Y Treasury | 4.28% | ↑ 9bps |
| SOFR (overnight) | 4.31% | flat |
| 30-day SOFR avg | 4.30% | flat |
| 5Y Swap Rate | 4.18% | ↑ 8bps |
| 10Y Swap Rate | 4.35% | ↑ 10bps |
Fed Watch
Rate cuts priced through 2026: Zero.
After months of the market expecting three, then two, then one cut — the bond market has given up entirely. According to Bloomberg’s Edward Bolingbroke, swaps linked to Fed rate decisions now show more than 50% probability that the Fed hikes rates before April 2027.
The Fed held steady last week with three dissenters — an unusually high level of internal disagreement. Next FOMC meeting: June 17-18.
For deeper analysis on the Warsh transition: Read JP’s take on Pensford
What Moved This Week
PCE inflation surged 0.7% month-over-month — the largest single-month jump since June 2022. Mohamed El-Erian wrote that “the velocity of change outpaced the capacity of some frameworks to contain it.”
Oil swung between $110-$126 in 48 hours on continued Strait of Hormuz blockade uncertainty. The UAE’s OPEC departure compounded energy market instability.
The S&P 500 posted its best month since 2020 — up 10%, driven by AI earnings surprises. The disconnect between equity optimism and bond market caution is widening.
CRE Debt Signal
- Multifamily cap rates dropping below 5% in select markets, driven by capital seeking CRE as an inflation hedge (GlobeSt)
- AvalonBay-Equity Residential merger talks — Jay Parsons notes the combined entity would control less than 4% of apartments in any market. Deal driven by both REITs trading below NAV.
- Goldman Sachs eyeing office debt outside NYC, seeing incremental yield vs. other property types
Action Items
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Re-run refinancing scenarios at today’s rates. If your model assumes any rate cuts, update it to zero cuts through year-end.
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Check cap expiration dates across your portfolio. Rising oil + rising vol = rising cap replacement costs. Know your exposure.
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Stress-test covenant compliance. Run your DSCR and debt yield tests at current rates, not origination rates. LoanBoss does this automatically — see how it works.
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Review floating-rate exposure. With hike probability above 50%, unhedged floating-rate debt carries meaningful upside risk.
Deeper Reading
- Interest rate caps — how they work in your portfolio (LoanBoss)
- Caps 101 — the mechanics of how caps are structured (Pensford)
- Cap and Floor Pricer — download the latest SOFR pricing tool (Pensford)
The Debt Stack is published every Monday by the LoanBoss team. It is not financial advice. For hedging strategy, talk to Pensford.