Rates This Week
| Benchmark | Level | Weekly Change |
|---|---|---|
| 10Y Treasury | 4.55% | ↑ 7bps |
| 5Y Treasury | 4.32% | ↑ 8bps |
| SOFR (overnight) | 4.31% | flat |
| 30-day SOFR avg | 4.31% | flat |
| 5Y Swap Rate | 4.22% | ↑ 8bps |
| 10Y Swap Rate | 4.39% | ↑ 8bps |
Fed Watch
Rate cuts priced through 2026: Zero. Hike odds ticked up.
The selloff in Treasuries pushed the 10Y back above 4.50%, and swap-implied probabilities now show roughly 55% odds of a hike before April 2027 — up from ~52% last week (Bloomberg).
The Kevin Warsh confirmation vote is expected this week in the Senate Banking Committee. Markets are watching for any signaling on his policy stance ahead of the June 17-18 FOMC meeting, which would be his first as chair if confirmed on schedule.
For context on the Warsh transition: What a new Fed chair means for CRE rates (LoanBoss)
What Moved This Week
Oil stabilized around $115/barrel after weeks of volatility. Strait of Hormuz shipping lanes are functioning under a multilateral naval escort framework, reducing the risk premium that had pushed crude above $125 in April (Reuters).
Durable goods orders rose 1.2% in April, beating expectations and suggesting business investment is holding up despite rate headwinds (Census Bureau).
The 2Y/10Y spread widened to 38bps — the steepest since early 2024. The curve is repricing the “higher for longer” regime, with the front end anchored by SOFR and the long end selling off on supply concerns from the federal deficit (Bloomberg).
Memorial Day liquidity thinned markets heading into the weekend, amplifying the rate moves late in the week.
CRE Debt Signal
- CMBS spreads tightened 10-15bps across the capital stack over the past month. Trepp data shows conduit AAA spreads at S+92, the tightest level since Q3 2024. Investor demand for structured CRE product is recovering.
- Construction starts declined 8% year-over-year in April, per Census Bureau data. Multifamily permits fell the hardest, down 14% — a forward indicator that supply pressure will ease in 2028-2029.
- Industrial cap rate compression continues. CBRE reports Class A logistics assets trading at sub-5% cap rates in major distribution hubs, with investor appetite underpinned by nearshoring and e-commerce demand.
- Regional bank CRE appetite remains cautious. Anecdotal reporting points to continued pullback from banks in the $10-50B asset range, keeping non-bank and agency lenders in the driver’s seat for CRE originations.
Action Items
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Lock or extend rate locks if you are in process. The 7bps selloff in the 10Y is a reminder that rates can move fast. If you are within a lock window, evaluate whether to lock now or risk further upside.
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Monitor CMBS execution for refinancings. Spread tightening means conduit and SASB execution is improving. If you have a loan maturing in the next 12 months, get updated quotes from your CMBS desk.
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Reassess construction pipeline exposure. Declining starts are a medium-term positive for rent growth, but the near-term supply overhang (projects already underway) remains real. Know your submarket delivery schedule.
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Track the Warsh confirmation. A new chair may shift tone at the June FOMC. Borrowers should not bet on policy change, but understanding the forward guidance framework matters for hedging timing — see your portfolio in LoanBoss.
Deeper Reading
- Interest rate caps — how they work in your portfolio (LoanBoss)
- Cap and Floor Pricer — download the latest SOFR pricing tool (Pensford)
- Interest Rate Caps 101 — the mechanics explained (Pensford)
The Debt Stack is published every Monday by the LoanBoss team. It is not financial advice. For hedging strategy, talk to Pensford.