Rates Tick a Touch Lower as Crude Oil Prices Drop

Flash Update: US RATE MARKETS – MONDAY NOVEMBER 9, 2026

• US Treasury yields and SOFR swap rates are ticking lower this morning, as markets digest the results of the US midterm elections and monitor renewed diplomatic efforts to end the US-Iran conflict

• Lower oil prices are pushing rates a touch lower this morning, particularly on the longer end of the curve; Short-end rates are holding in given the market’s rate hike expectation for December

• Equity markets have stabilized for the time being, but pressure continues to mount on the AI-led tech sector – this is likely to be a main market theme for the foreseeable future

• In other equity related news, Nvidia Corp. fell more than 5% in early trading after CEO Jensen Huang’s admission of an affair with a woman identified as a suspected Chinese spy – this is a developing story

• The strong Employment Report results we saw on Friday helped solidify the prospects for a rate hike in December

• Odds for a 25 bp rate increase in December are currently sitting at ~80.8%

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

• Next up for economic data: October CPI prints tomorrow, 11/10 at 8:30 AM; October PPI prints on Friday, 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 flat to down ~1 bp this morning, depending on tenor

• Medium-term SOFR swap rates are down ~1-3 bps currently, depending on tenor

• Long-end SOFR swap rates are trading down ~2-4 bps this morning, depending on tenor

Good morning – US Treasury yields and SOFR swap rates are ticking slightly lower this morning, mainly due to a downtick in crude oil prices. Renewed diplomatic efforts to end the war appear to be gaining momentum, increasing the outlook for a peaceful settlement. As such, crude oil prices have ticked lower this morning, which is alleviating some of the fear of higher sustained inflation. That modest “inflation relief” is in turn leading to slightly lower rates this morning, particularly on the longer end of the curve. Short-end rates are less impacted this morning, given the prospects for a rate hike in December.

Traders continue to digest the US midterm election results and carefully monitor the unstable equity markets. Dip buyers are propping up the equity markets as we start the week, but make no mistake, until the path forward for AI becomes clearer AI-led tech jitters will remain for the foreseeable future,.

Markets are bracing for tomorrow’s CPI data. However, given last year’s government shutdown and data blackout, the BLS will not be publishing any Year-on-Year CPI data for October. That means we will only see the Month-on-Month CPI data released tomorrow. That could also mean that Friday’s PPI release will be even more important than usual for traders – note PPI will show the YoY data. An uptick in the October inflation data will likely solidify the prospects for a December rate hike. That said, the market will see October PCE data later this month, which we know remains the Fed’s preferred inflation gauge.

Expectations for tomorrow’s CPI data are as follows: Headline CPI MoM, 0.3% (vs. 0.6% the prior month); Core CPI MoM, 0.2% (vs. 0.3% prior).

CHART OF THE DAY:

A: Renewed Efforts to End the War in Iran Push Oil Prices Lower…Will Rates Follow?

Source: BLOOMBERG, LLP | PRICE OF BRENT CRUDE OIL, YTD

SOFR Swap Market - Quick Summary:

• The 1Y SOFR swap rate is trading flat to down ~1 bp this morning. 2Y and 3Y SOFR swap rates are currently trading down ~1-2 bps. 5Y and 10Y SOFR swap rates are trading down ~2-3 bps this morning. The very back-end of the swap curve (20Y and 30Y) is currently trading down ~3-4 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 growing 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: 9:30 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 | 9:30 AM NY Rates Snapshot

CHART 2 & 2A: SOFR SWAP RATES TICK SLIGHTLY LOWER AS MARKET GRAPPLES WITH MYRIAD MARKET FORCES

SOFR swap rates are ticking a touch lower this morning, as the market grapples with myriad market forces. Diplomatic efforts to end the war in Iran, lower oil prices, equity market jitters, key economic data, and the changing US political landscape will all compete for the market’s attention this week.

October CPI prints tomorrow at 8:30 AM, which kicks off a week of important inflation data.

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.

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 ~4.334% (+91.4 bps)

• The 2-year SOFR swap rate closed at 3.21% on Friday 2/27/2026 – it is currently trading at ~4.378% (+116.8 bps)

• The 3-year SOFR swap rate closed at 3.22% on Friday 2/27/2026 – it is currently trading at ~4.367% (+114.7 bps)

• The 5-year SOFR swap rate closed at 3.22% on Friday 2/27/2026 – it is currently trading at ~4.341% (+112.1 bps)

• The 10-year SOFR swap rate closed at 3.52% on Friday 2/27/2026 – it is currently trading at ~4.433% (+91.3 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 11/5/2026

• Current 1-Month SOFR = 3.89748% (Prior Day’s Reset: 3.90198%)

• Cap premiums have declined recently as SOFR swap rates have moved lower

• Dislocation in the equity markets created a flight-to-quality last week, which helped push cap premiums lower  

• Rate volatility has settled down as markets contemplate the path forward for interest rates and await a new US political landscape

• The dip is volatility is also helping to lower cap premiums, particularly two- and three-year tenor caps

• 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.

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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.