The Fed's next move is a hike, not a cut
Futures markets now price December rate increases as oil shocks and sticky inflation erase two years of easing expectations and invalidate every refinancing plan built on cheaper money.
30-year Treasury yield, highest since 2007
Fed funds futures flipped from pricing cuts to pricing hikes by December, while JPMorgan's private credit desk traded $2B this year — more than all prior years combined — as institutions rotate out of duration-long positions.
One pattern. Trace it.
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A pattern worth naming
If core CPI prints above 0.3% MoM again, the December hike becomes base case. The 30-year at 5.1% is the canary; 5.5% triggers a CRE refinancing crisis.
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Floating-rate exposure shifted from refinancing opportunity to balance sheet liability as the cutting cycle vanished
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Private credit became an actively traded asset class as JPMorgan's secondary volume exceeded all prior years in four months
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National banks gained structural cost advantage over state charters as OCC preempted escrow interest mandates
“If the Fed hikes in December instead of cutting, which of our commercial real estate clients hit covenant violations first?”
Ask your CFO which floating-rate facilities renew in the next 18 months and what a 25-basis-point December hike does to your interest expense run rate.
By Joseph Lancaster, Editor — with research from Pine Needle's intelligence layer.
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