Episode 78: Treasury at 4.25% — Green Light for Selective Deployment

It's Wednesday, April 8th, 2026 — tracking the 10-year Treasury and what it signals for commercial real estate.WHAT'S HOT:10-Year Treasury eased to 4.25% — down 8 bps from yesterday's 4.33%Sitting in the sweet spot — 4.0 to 4.25% range where cap rate spreads workAgency CMBS spreads compressed ~15 bps in early 2026Ginnie Mae 223f spreads at tightest levels since May 2022Commercial mortgage rates starting at 5.36% as of April 7thLow-leverage spreads tightening into 115-125 bps rangeBanks easing underwriting standards for first time since 2022 rate hikesLife insurance companies increasing allocations, actively seeking to place capitalMultifamily, industrial, grocery-anchored retail are favored asset classesQ1 2026 transaction volume projected to exceed $66B — marginal improvement over Q1 2025Office and Industrial emerged as pace leadersSoutheast outperformed all regions — 26% increase in transaction dollar volumeWHAT'S NOT:Rate cut expectations fading — Fed held at 3.5-3.75% for second consecutive meetingCME FedWatch shows only 27.5% probability of December 2026 cutJPMorgan forecasts no cuts in 2026 — possible hike in Q3 2027Goldman Sachs expects two cuts, but they're in the minorityCPI core inflation projected at 3.1% year-end 2026; PCE core at 2.9%Fed's 2% target still out of reachTariffs, fiscal deficits, elevated energy prices keeping upward pressure$875B in CRE loans maturing in 2026 — refinancing pressure is realBorrowers who financed at 3-4% now facing 6-8% refinancing ratesBid-ask spreads still wide; deal velocity anemic in some sectorsWHY IT MATTERS:The 10-year at 4.25% is constructive for CRE. Every 100 bps move in the 10-year translates to 41 bps of cap rate movement for industrial, 75 bps for multifamily, and 78 bps for retail. We're in a range where transactions can clear — but we need stability, not just a single-day move. The Fed projecting only one cut this year means rates stay higher for longer. Fiscal deficits exceeding 100% of GDP are putting structural upward pressure on yields. Don't expect sub-4% rates anytime soon.INVESTOR TAKEAWAY:The 10-year at 4.25% is a green light for selective deployment. Lock in financing while CMBS spreads are tight. Focus on multifamily, industrial, and necessity retail where lenders are competing. But underwrite conservatively — refinancing risk is real, and rate cuts aren't coming fast.#TreasuryYield #InterestRates #CRE #CommercialRealEstate #CMBS #CapRates #Multifamily #Industrial #Retail #FederalReserve #RealEstateFinance #CREInvesting #Refinancing #LendingConditions #DealFlow #PropertyInvesting #RealEstateMarket #WhatsHotWhatsNot]]>