Thirty Capital Market Update (10/21)
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Rates stayed mostly flat last week, but the 2-year and 10-year Swap rates are up 3 BPS and 12 BPS, respectively, looking back two weeks. Overnight SOFR is currently sitting at 4.84%, and 1M CME SOFR is 10 BPS higher. There’s still a 92% chance of a 25 BPS cut in November, which we’re starting to see priced into SOFR resets. Retail Sales data came out stronger than expected on Thursday, and Initial Jobless Claims came in lower than expected. The week prior, CPI came out stronger than expected as well.
All these strong data points beg the question, should the Fed skip a meeting and hold off on cutting rates for now? Bloomberg’s WIRP model still predicts an 85% chance of two more cuts this year, but the Fed will have a tough decision to make depending on what the data looks like over the next couple weeks. The election being two days before the November Fed meeting is also worth noting.
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This week is light on the economic data front. We get Durable Goods numbers on Friday, a variety of Q3 earnings numbers, and some Fed speak. A lot of borrowers are scrambling to get deals done prior to the election and end of year. Freddie’s new mandate for submissions is 11/12 to close by the end of the year. On the multifamily side, there’s a lot of competition for deals and the Agencies are primarily funding acquisitions of late.
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