Rates March Higher as Traders Grapple with Myriad Market Forces

Flash Update: US RATE MARKETS – THURSDAY NOVEMBER 12, 2026

• US Treasury yields and SOFR swap rates are moving higher this morning as the market grapples with multiple market forces at work

• Contributing to higher rates this morning are comments by President Trump saying he “doesn’t need a deal with Iran”, which reversed the recent decline in crude oil prices

• President Trump’s comments pushed the price of Brent crude oil back over $94 per barrel this morning, spooking markets already worried about higher inflation

• Given the various market forces at work, we could see choppy, volatile rate markets today

• Multiple Fed officials are on the tape today – traders will be interested in their views on inflation and the economy, particularly given the unexpected upside CPI surprise we saw earlier this week

• The AI-led tech sector will once again be a major market theme today as markets parse and digest the Nvidia situation – this is a developing story that I expect to continue to impact markets into next week – this is likely to be a main market theme for the foreseeable future

• Odds for a 25 bp rate increase in December have increased to ~99.8%, Odds for a 50 bp rate hike in December have crept up to ~14%

• The next FOMC rate decision is due on December 9th at 2:00 PM

• Next up for economic data: October PPI prints tomorrow, 11/13 at 8:30 AM

• The results of the US midterm elections are likely to have significant US policy ramifications, which in turn could impact the outlook for interest rates

• Short-term SOFR swap rates are trading up ~5-6 bps this morning, depending on tenor

• Medium-term SOFR swap rates are up ~3-5 bps currently, depending on tenor

• Long-end SOFR swap rates are trading up ~1-3 bps this morning, depending on tenor

Good morning – US Treasury yields and SOFR swap rates are higher again this morning as the market grapples with myriad market forces. Rates surged on Tuesday after a hot CPI print re-ignited fear of higher inflation. This morning, rates are higher after comments by President Trump saying he “doesn’t need a deal with Iran”. Trump’s comments reversed the recent decline in oil prices – Brent crude oil is now trading at ~ $94 per barrel. This is the last thing an already “inflation sensitive” market needs, especially given the hot CPI data we saw on Tuesday.

Rates are likely to remain biased higher today and we will see October PPI data tomorrow morning at 8:30, rounding out the inflation data for the week. That said, we could see lower rates if equity markets struggle, or if a Nvidia sparked flight to quality occurs today. A full plate of Fed speakers and a 30-Year US Treasury Auction will also be in focus for markets today. This could be a volatile day!

Producer prices will come under the spotlight on Friday after the upside inflation surprise earlier this week. Expectations for tomorrow’s PPI data are as follows: Headline PPI MoM, 0.4% (vs. 1.3% the prior month); Core PPI MoM, 0.3% (vs. 0.7% prior); Headline PPI YoY, 6.6% (vs. 6.3% prior); Core PPI YoY, 5.0% (vs. 5.0% prior). Given the renewed focus on inflation, a strong PPI print is likely to push rates higher. A weaker-than-expected PPI print could curtail the upward pressure on rates, but I still expect the bias to be towards higher rates, at least until we see the October PCE data released on 11/25. Lower oil prices could also be a catalyst for lower rates.

CHARTS OF THE DAY:

A: Schedule of Fed Speakers Today & Tomorrow   

Source: BLOOMBERG, LLP | SCHEDULE OF FED SPEAKERS FOR 11/12/2026 & 11/13/2026

B: Markets Are Still Very Sensitive to Movement in Crude Oil Prices

Source: Bloomberg, LLP | 2Y US TREASURY YIELD – 11/12/2026

SOFR Swap Market - Quick Summary:

• The 1Y SOFR swap rate is trading up ~5-6 bps this morning. 2Y and 3Y SOFR swap rates are currently trading up ~5-6 bps. 5Y and 10Y SOFR swap rates are trading dup ~3-5 bps this morning. The very back-end of the swap curve (20Y and 30Y) is currently trading up ~1-3 bps from yesterday’s closing levels.

“Key News” the market is tracking includes:

• Geopolitical developments will continue to weigh on markets. Developments in the US/Iran “war”, and the direction of crude oil prices, will continue to captivate the market’s attention.

• Lack of forward guidance from the Fed is forcing traders to pay more attention to economic data – this may fundamentally change the way markets position for and react to Fed rate decisions going forward. FOMC Chair Warsh’s vague and ambiguous press conference last week confused markets and is likely to lead to increase volatility as we approach the next Fed meeting.

• Market participants will now shift focus to the policy and economic ramifications of the US midterm elections.

• Traders are also focused on the performance of the AI sector and more broadly, on what AI “really means” for the US and global economies. Overall market sentiment, and perhaps even economic performance, may be impacted by AI for the foreseeable future.

CHART 1: US RATES SNAPSHOT: 9:15 AM Eastern

Chart 1 Key:

• Far Left Columns: US Treasury Yields & Change on Day (bps)

• Center Columns: SOFR OIS Swap Spreads (bps) & Change on Day (bps)

• Far Right Columns: SOFR OIS Swap Rates & Change on Day (bps)

Please note: Market levels can change rapidly – rate cap premiums are subject to a dynamic market that can change frequently.

UST YIELDS | SWAP SPREADS | SOFR SWAP RATES

Source: Bloomberg, LLP | 9:15 AM NY Rates Snapshot

CHART 2 & 2A: SOFR SWAP RATES MOVE HIGHER ON PRESIDENT TRUMP’S “IRAN” COMMENTS, HIGHER OIL PRICES

SOFR swap rates shot higher this morning after comments by President Trump pushed crude oil prices higher. There are numerous forces at work in the market currently that will be competing for the spotlight throughout the day, and for the near future. Prepare for increased levels of rate volatility in the coming weeks.

Rate markets will continue to grapple with myriad market forces. Uneven diplomatic efforts to end the war in Iran, fluctuations in crude oil prices, heightened equity market jitters, key economic data, and the changing US political landscape will all compete for the market’s attention in the near term.

It is far too early to draw any concrete conclusions from the US midterm election results, but it is clear the US will be operating under far different administrative, legislative and policy environments going forward. Stay tuned!

US-IRAN WAR IMPACT: Key SOFR Swap Rate Movements Since the Onset of the US-Iran War  

• The 1-Year SOFR swap rate closed at 3.42% on Friday 2/27/2026 – it is currently trading at ~4.576% (+115.6 bps)

• The 2-year SOFR swap rate closed at 3.21% on Friday 2/27/2026 – it is currently trading at ~4.655% (+144.5 bps)

• The 3-year SOFR swap rate closed at 3.22% on Friday 2/27/2026 – it is currently trading at ~4.635% (+141.5 bps)

• The 5-year SOFR swap rate closed at 3.22% on Friday 2/27/2026 – it is currently trading at ~4.582% (+136.25 bps)

• The 10-year SOFR swap rate closed at 3.52% on Friday 2/27/2026 – it is currently trading at ~4.631% (+111.1 bps)

CHART 2: SOFR OIS Swap Rates – Prior 12-Months

Source: Bloomberg, LLP | 1Y (gold line), 2Y (violet), 3Y (orange), 5Y (blue) and 10Y (white) SOFR ANNUAL OIS SWAP RATES; Year-To-Date 2026

CHART 2A: US Treasuries: Yield Overview – Prior 6-Months

Source: StreetStats | US Treasury Yields – Prior Six Months

RCA Product & Pricing Update:

Product Spotlight: What We Are Seeing in the Rates & Derivatives Markets

The market is once again facing tremendous uncertainty surrounding the path forward for interest rates. Borrowers should be as nimble as possible in this market environment. Cap purchasers should onboard as quickly as possible – there is no cost to onboard. It is important to be in a position to take advantage of market opportunities quickly and efficiently.

There is an increasing interest in exploring interest rate swaps as a possible hedge alternative. IR Swaps lock in a synthetic fixed rate and do not require an upfront premium. Unlike an interest rate cap, however, swaps are secured derivatives, so the counterparty selection process is more challenging with a swap. It is often challenging to place a swap away from the lender or incumbent relationship bank. There are also additional variables that factor into the decision to pursue an interest rate swap, or to unwind an existing swap. With the uptick in swap rates recently, we are also seeing an increase in swap termination requests. Please let us know if you would like to learn more about interest rate swaps, or swap terminations. RCA offers a full range of Derivative Advisory services.

Given the high-level of uncertainty surrounding forward rates, many clients are grappling with when or if to extend. This is a difficult question – our advice has been to monitor the market closely and be on-boarded and ready to trade, should the market move in your favor. We also advise borrowers to check the market pricing for extensions. Market price discovery is a key component to any cap transaction – new caps, extensions, or terminations.

We are still seeing some residual demand for interest rate floor indications – to offset high loan floors or simply to benefit from declining variable rates. Borrowers who have “floors” embedded in their loans have been considering purchasing a separate, stand-alone interest rate floor to offset the loan floor.

Interest Rate Cap Hub: Cap Pricing & Rate Volatility Update for 11/12/2026

• Current 1-Month SOFR = 3.92072% (Prior Day’s Reset: 3.91838%)

• A hot CPI print earlier this week pushed rates materially higher, leading to a significant increase in cap premiums this week

• Rate volatility has also spiked this week given the dramatic move in rates

• Market uncertainty surrounding the path forward for interest rates remains elevated

Cap Pricing Matrix: 1-Month Term SOFR Cap Premiums: Week-On-Week

*Indications as of Market Open. Premium levels provided are indications only and subject to frequent change.

CHART 3: Historical Volatility: MOVE Composite US Treasury Yield Volatility Index – Year-To-Date 2026

Source: Bloomberg, LLP | HISTORICAL US TREASURY YIELD VOLATILITY, “MOVE” INDEX – YTD 2026

^NOTE: RATE MARKETS CAN BE VOLATILE - MARKET DYNAMICS AND PRICING CAN CHANGE VERY QUICKLY IN THIS MARKET ENVIRONMENT.

**WE RECOMMEND YOU CALL US FOR ACCURATE, UP-TO-THE-MINUTE CAP INDICATIONS.**

Please contact us if you would like to discuss an upcoming rate cap or rate cap extension, explore ways to reduce or eliminate escrow deposits for replacement caps or learn more about interest rate Caps, Floors, Swaps or Swaptions. RCA can also assist you with the voluntary early termination of your cap or swap.

Hedge With An Edge - The RCA Edge!

Disclaimer: The information provided in this communication is intended for discussion purposes only. Nothing presented in this communication should be taken as a recommendation or forecast. All market data shown is indicative only and subject to change depending on current market conditions. The information in this publication is confidential and is intended for the recipient only.