Capital Markets Update: spreads are tighter. The Treasury is not.

This week in one paragraph

Four things matter this week. Long rates sit near a 24-year high: the 10-year Treasury closed at 5.28% on October 7, 109 basis points above January 2, after a 5.31% close on October 5 that was the highest since 2002. The Fed raised its target range to 3.75% to 4.00% on September 16, and the minutes released today say most officials see another increase as likely appropriate by year end, even though September added only 29,000 jobs. Trepp's CMBS delinquency rate rose 17 basis points in September, led by multifamily. And lenders are still competing, at spreads narrower than a year ago. The spread is not what changed. The base rate did.

Rates

Long rates did most of the moving. From January 2 to October 7, the 10-year rose from 4.19% to 5.28% and the 2-year from 3.47% to 4.77%. Almost half of the 10-year's move came in the last month: it was 4.80% on September 8. SOFR, the base for floating-rate loans, rose from 3.64% to 3.90% over the same month, mostly on the Fed's increase. Prime is 7.00%.

Why. The Fed's minutes, released October 7, say nominal yields rose about 35 basis points across the 2- to 10-year range between the July and September meetings, partly on "the higher expected path of monetary policy and the strength of economic data." Commentary cited in the minutes also points to "competition for capital from heavy private debt issuance" tied to AI, and to geopolitical developments. Underneath is inflation: BEA reported on September 30 that PCE prices rose 3.4% in the year to August, 3.0% excluding food and energy. On October 1, Vice Chair Jefferson said inflation "is too high and has exceeded the Federal Reserve's 2 percent target for more than five years." Two days earlier, Governor Barr said that in his base case, "further policy adjustments are likely to be needed."

The counterweight is jobs. BLS reported on October 2 that payrolls rose 29,000 in September, with unemployment at 4.2%. July was revised to a loss of 10,000 and August to a gain of 133,000. Hourly earnings were up 3.0% from a year earlier. Our read: soft hiring is the case for waiting in October, and the minutes are the case for moving by December. The next decision comes October 28.

What it means for loan pricing

Fixed-rate loans price over a Treasury; floating-rate loans over SOFR. Below, we add spreads implied by loans we arranged and by public data to today's base rates. Indicative, not quotes: leverage, sponsor, property and prepayment terms move any single loan.

• Bank permanent, multifamily: about 6.3% to 6.9%. Our bank apartment loans closed at 5.40% in August 2025 (10-year 4.22% to 4.34% that month), 5.41% in September 2025 (4.01% to 4.28%) and 6.085% in July 2026 (4.48% to 4.75%): roughly 105 to 160 basis points over the 10-year. Added to 5.28%, that is about 6.3% to 6.9%. CBRE's average second-quarter multifamily spread of 162 basis points, added to today's 5-year (5.03%) or 10-year, gives 6.65% to 6.90%.
• Bank permanent, office and retail: about 6.7% to 7.3%. Our Tarzana office refinance closed at 5.70% in September 2025, 142 to 169 basis points over that month's 10-year, which gives about 6.7% to 7.0% today. CBRE's 204 basis point average commercial spread gives 7.07% to 7.32%.
• CMBS conduit, hotels: about 6.9% to 7.5%. Bridge's Q2 2026 hotel report, citing CRED iQ, put second-quarter hotel conduit coupons at about 6.3% to 6.5%, when the 10-year ran 4.26% to 4.67%, a spread of roughly 165 to 225 basis points. Added to 5.28%, that is about 6.9% to 7.5%.
• Bridge and transitional, debt funds: about 7.4% to 8.9%, before points. For hotels, the same Bridge report put transitional debt at SOFR plus 350 to 500 basis points: 7.40% to 8.90% with SOFR at 3.90%. Our 8.50% debt fund bridge in Venice in October 2025, when SOFR ran 4.04% to 4.31%, sat about 420 to 445 over SOFR, or about 8.1% to 8.4% today.
• SBA 504 for owner-users. Published CDC rate sheets show the September 10 debenture pricing at 6.54% for 25-year and 6.53% for 20-year terms, including ongoing fees. The 10-year closed at 4.95% that day, 33 basis points below where it is now.

Read across, fixed-rate pricing is about a point higher than in January, nearly all of it from the Treasury. Floating-rate pricing has moved far less, because SOFR is up only 15 basis points since January 2. CBRE noted borrowers shifting toward floating-rate loans for that cost gap and for prepayment flexibility. If you go that way, price a rate cap or a fixed-rate option next to the floating quote before you sign.

Credit and lending conditions

• CMBS delinquency (Trepp, September). Overall up 17 basis points from 7.85% in August. Office 12.16%, up 16. Multifamily 8.04%, up 35, the largest increase of any property type. Lodging 6.18%, up 34. Retail 6.58%, down 62 from 7.20%. Industrial 1.14%, unchanged.
• Originations (MBA, second quarter). Up 16% from a year earlier and 12% from the first quarter. Retail rose 61%, office 47% and multifamily 8%. By source, CMBS rose 68% and depositories 61%, while Fannie Mae and Freddie Mac fell 17%.
• Spreads and leverage (CBRE, second quarter). Average commercial spreads of 204 basis points, 21 tighter than a year earlier; multifamily 162, 15 tighter. Average loan-to-value 59.6%, debt yield 10.2%. Alternative lenders made 38% of non-agency closings and banks 30%, up from 24%. CBRE describes lenders as competing on price rather than leverage.
• Bank standards (Federal Reserve Senior Loan Officer Opinion Survey, July). In the latest survey, covering the second quarter, banks on net eased standards for commercial property and multifamily loans and left construction standards unchanged, with weaker construction demand. A significant net share still put construction standards at the tighter end of their range.

Put together: capital is available and priced competitively for stabilized, well-documented property. The stress sits mostly with loans written at lower rates that now have to refinance at these.

What we are seeing

• Apartment refinances are capped by coverage, not value. In our worked example, a $6.0MM Los Angeles building returns about $455,000 less cash at today's rates than at the 5.40% we closed in 2025. See cash-out refinancing an LA apartment building.
• Office has split in two. Small, well-leased office still finances with banks, as our Tarzana refinance did at 5.70%. Lease-up goes to debt funds. See office financing in 2026.
• Hotel bridges price off SOFR, but the exit prices off the 10-year. Our $7.5MM Venice hospitality bridge closed at 8.50% in two weeks. The bridge rate has barely moved this year; the takeout has. See hotel bridge loans in 2026.
• In South Florida, insurance sets the loan size. In our example, a $50,000 swing in premium moves refinance proceeds by about $510,000. See refinancing in South Florida.
• Land carry floats. On a $3.0MM land loan, each 25 basis point move in SOFR changes interest by $7,500 a year. See land development loans in California.

Dates to watch

• October 14: September consumer price index (BLS).
• October 27 to 28: FOMC meeting, with the decision October 28. No economic projections at this meeting.
• October 29: September personal income and PCE prices (BEA).
• November 6: October jobs report (BLS).
• November 10: October consumer price index (BLS).
• Early November: Trepp's October CMBS delinquency report.
• December 8 to 9: FOMC meeting, with updated projections.

This briefing updates every week at this address. If you have a maturity, refinance or acquisition in the next twelve months, send us the numbers. We will tell you within two business days what the market will lend, from which kind of capital, and at what indicative cost.

Sources. Treasury yields: U.S. Treasury daily par yield curve, January 2, 2026 through October 7, 2026, and Federal Reserve H.15, released October 7, 2026; highest since 2002: FRED DGS10, October 5, 2026. SOFR: Federal Reserve Bank of New York and FRED SOFR, through October 6, 2026. Prime: FRED DPRIME. Fed decision: Federal Reserve, September 16, 2026. FOMC minutes: Federal Reserve, released October 7, 2026. Meeting calendar: Federal Reserve. Speeches: Jefferson, October 1, 2026; Barr, September 29, 2026. Inflation: BEA, September 30, 2026. Jobs: BLS Employment Situation, October 2, 2026. Release calendars: BLS CPI and BLS jobs schedules. CMBS delinquency: Trepp via Yield PRO, October 4, 2026, and Multi-Housing News, September 28, 2026. Originations: MBA, August 6, 2026. Spreads and leverage: CBRE Lending Momentum Index, August 3, 2026. Conduit coupons and transitional spreads: Bridge, Hotel CRE Quarterly Q2 2026, August 4, 2026. Bank standards: Federal Reserve SLOOS, July 2026, updated August 3, 2026. SBA 504: published CDC rate sheets (one, two), September 10, 2026 pricing, viewed October 7, 2026. Spreads implied by Piccard closings are computed from each closing's note rate and the range of the benchmark in its closing month; the pricing ranges are arithmetic, not quotes.

Rates and terms referenced are drawn from public market data, transactions arranged by Piccard Financial and recent lender quotes, reflect conditions on the dates shown, and change with the market. Nothing here is an offer or a commitment to lend. Piccard Financial is a capital markets advisory firm, not a lender.