Rates Tick Higher as Traders Await FOMC Rate Decsion, Key Tech Earnings Reports and Upcoming Economic Data

Flash Update: US RATE MARKETS – WEDNESDAY APRIL 29, 2026

• UST yields and SOFR swap rates are ticking higher this morning as traders weigh the latest US/Iran war developments and await the FOMC rate decision, due today at 2:00 PM

• The FOMC is anticipated to hold the overnight benchmark rate unchanged; This will be Powell’s final press conference as FOMC Chairman

• The US/Iran war remains the primary focus for the rate markets

• The US signaled it would stick with a naval blockade of Iranian ports to choke-off Tehran’s oil exports and force Iran back to the negotiating table

• Traders continue to grapple with a range of possible outcomes for the war in the Middle East

• Overall, market participants are clinging to hope that a “longer-term” peace plan can be achieved in the near-term

• Market participants and investors will be watching the earnings reports of Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., and Microsoft Corp. after the market closes today for clues on the stock market's direction

• Fed officials are subject to the pre-meeting communications blackout until April 30, 2026

• The next time we hear from a Fed official will be Chairman Powell’s post-meeting press conference today at 2:30 pm

• Next up for Data:Personal Income, Personal Spending, PCE, ECI & Q1 GDP are all due for release tomorrow April 30th, 2026

• Short-term SOFR swap rates are trading up ~2-3 bps this morning, depending on tenor

• Medium-term SOFR swap rates are up ~2-3 bps currently, depending on tenor

• Long-end SOFR swap rates are up ~1-2 bps this morning, depending on tenor

Good morning – As I have been highlighting, this is a big week for markets. The rubber meets the road today! US Treasury yields and SOFR swap rates are ticking higher this morning as the market prepares for the Fed rate decision due this afternoon at 2:00 PM. Chair Powell will hold his final press conference as Chairman of the FOMC this afternoon at 2:30 PM. Market participants continue to anxiously monitor the latest war developments. The US signaled it will continue its naval blockade of Iranian ports to choke-off Tehran’s oil exports and force Iran back to the negotiating table. Additionally, four of the biggest companies in the US — Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., and Microsoft Corp. — are due to report earnings today after the closing bell. Market participants and investors will be paying very close attention to the “big tech” results due this afternoon.

The FOMC is expected to leave the benchmark rate unchanged today. Traders will be much more interested in what Fed officials think about the impact of the war, the threat of higher inflation, and the policy bias going forward. Furthermore, there are still many unanswered questions regarding Chair Powell’s future at the Fed, and the monetary policy views of the probable incoming FOMC Chair, Kevin Warsh. Despite the current “on hold” monetary policy, there is plenty going on behind the scenes at the Fed.

Currently, short-term SOFR swap rates are up ~1-3 bps this morning – rates remain significantly above pre-war levels. Fed sentiment has also shifted – the hope for a rate cut this year has been replaced by fear of higher war-induced inflation and the possibility that the Fed’s next move may be a rate hike.

The “big week” continues tomorrow: We will see a full plate of important economic data released tomorrow: March PCE, Q1 GDP, ECI, Personal Income and Personal Spending data will all be released tomorrow, 4/30. Coming directly on the heels of the FOMC meeting, those numbers are highly anticipated by the market. Here are some highlights of tomorrow’s data expectations: March PCE MoM, 0.7% (vs. 0.4% the prior month); Core PCE MoM, 0.3% (vs. 0.4% prior); PCE YoY, 3.5% (vs. 3.2% prior); Core PCE YoY, 3.2% (vs. 3.0% prior); Q1 GDP, 2.2% (vs. 0.5% the prior quarter); Core GDP Price Index, 4.1% (vs. 2.7% the prior quarter); Q1 Employment Cost Index (ECI), 0.8% (vs. 0.7% the prior quarter).

Overall, traders are still being very careful not to overreact to headlines and rumors – they have learned to ignore the ever-changing rhetoric and wait for the actual results. I think that is the primary reason we continue to see rates bouncing around in a narrow range – from my perspective, traders await concrete developments. The current war “limbo” is making markets nervous and uncertain, leading to slightly higher rates this week. Bottom line, market participants are losing patience. It is important to remember that “energy market” turmoil and supply dislocation can do lasting damage to the economy and lead to dramatically higher inflation. I advise staying nimble if you have upcoming caps or swaps to execute – market dynamics can and will change quickly.

“Key News” the market is tracking includes:

• Geopolitical developments continue to weigh on markets.The US/Iran “war” continues to dominate market sentiment this week.

• The US Justice Department has dropped the investigation into the US Central Bank and Chairman Powell, likely clearing the way for Kevin Warsh to be confirmed as the next FOMC Chairman. That is welcome news – the market is moving on. Questions remain as to Chair Powell’s plans once his term as Chairman ends. We may yet see some Fed drama as Powell’s decision unfolds. From the market’s perspective, there are still many questions surrounding both Mr. Warsh’s monetary policy views, and what is next for Jay Powell. Many still expect easier monetary policy under Warsh – odds for a rate cut later this year ticked a touch higher after the DOJ dropped the investigation. Stay tuned!

• Market participants continue to closely track developments in the US equities markets. There is still a sharp focus on the performance of the growing AI sector. Overall market sentiment, and perhaps even economic performance, could be impacted by “tech” earnings for the foreseeable future.

• Traders are growing increasingly concerned with the record-setting “partial” government shutdown currently underway. Traders are still hoping the situation is resolved quickly.

• SCOTUS is currently ruling on the legality of the President firing of the Fed’s Lisa Cook. There are some reports stating that SCOTUS is nearing a final decision on that case, which could have far reaching implications for the US Central Bank.

SOFR Swap Rate Summary: The 1Y SOFR swap rate is trading up ~2-3 bps this morning. 2Y and 3Y SOFR swap rates are currently trading up ~2-3 bps. 5Y and 10Y SOFR swap rates are trading up ~2-3 bps on the day. The very back-end of the swap curve is currently trading up ~1-2 bps from yesterday’s closing levels.  

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

CHART 1:US RATES SNAPSHOT: 9:00 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)

UST YIELDS | SWAP SPREADS | SOFR SWAP RATES

Source: Bloomberg, LLP | 9:00 AM NY Rates Snapshot

CHART 2, 2A & 2B: SOFR SWAP RATES TICK HIGHER AS TRADERS AWAIT FOMC RATE DECISION AND NERVOUSLY MONITOR WAR DEVELOPMENTS

SOFR swap rates are ticking a bit higher this morning, as market participants monitor war developments and prepare for a big week of central bank decisions, corporate earnings, and economic data. With the sideways trading we have seen recently, implied rate volatility has softened and is down noticeably from the peak we saw at the onset of the US/Iran war. The slight bump in oil prices this week and uncertain timetable for the next round of US/Iran negotiations are contributing to higher swap rates.

My view has not changed: I still feel that in the coming days, the primary market theme we have witnessed recently will continue: “confirmed” news that a long-term “peace plan” is progressing will lead to a bias toward lower swap rates; conversely, factual news that diplomatic efforts are stalled, failing, or may drag on indefinitely, will likely shift the bias toward higher swap rates.

That said, we will see a ton of “new” data and information the rest of the week and we will hear from the FOMC this afternoon– those factors could certainly impact the rate markets, although I do feel everything will continued to be viewed through a “war lens” until the conflict is resolved. We could see an uptick in volatility this week given the plethora of data and information we will see. Volatility has softened recently, as hostilities have abated while the two countries grapple with a diplomatic solution.

Key Swap Rate Movements Since The US/Iran War Began:

• The 2-year SOFR swap rate closed at 3.21% on Friday 2/27 – it is currently trading at ~3.694%(+48.4 bps).

• The 5-year SOFR swap rate closed at 3.22% on Friday 2/27 – it is currently trading at ~3.698%(+47.8 bps).

• The 10-year SOFR swap rate closed at 3.52% on Friday 2/27 – it is currently trading at ~3.920%(+40.0 bps).

CHART 2:Short-End SOFR Swap Rates – Prior 30 Trading Sessons

Source: Bloomberg, LLP | 1Y (white), 2Y (blue) & 3Y (orange) SOFR SWAP RATES; PRIOR 30 TRADING SESSIONS

CHART 2A:Long-End SOFR Swap Rates – Prior 30 Trading Sessions

Source: Bloomberg, LLP | 5Y (green), 7Y (purple) & 10Y (light blue) SOFR SWAP RATES; PRIOR 30 TRADING SESSIONS

CHART 2B:US Treasuries: Yield Overview Since October 2025

Source: StreetStats | US Treasury Bill, Note & Bond Yields; Prior 6-Months

RCA Product & Pricing Update:

Product Spotlight: What We Are Seeing In The Rates & Derivatives Markets

The market is 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.

Given the uncertainty that still remains about 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, similar to how you purchased the original cap. Market pricing discovery is a key component to any cap transaction – new caps, extensions or terminations.

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, swaps are secured derivatives, so the counterparty selection process is more challenging with a swap. There are also additional variables that factor into the decision to pursue an interest rate swap, or to unwind an existing swap. We are also seeing a dramatic increase in swap termination advisory requests recently, as clients contemplate refinancings. Lower rates have sparked refinancing activity, which in some cases necessitates unwinding an existing swap. Please let us know if you would like to learn more about interest rate swaps, or swap 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: Pricing & Volatility Update for 4/29/2026

• Cap premiums are fluctuating as rates bounce around in reaction to diplomatic efforts to end the war

• Cap premiums have moved lower recently given the significant decline in rate volatility and a drop in SOFR swap rates from “war highs”

• Current 1-Month Term SOFR = 3.65217% (Prior day: 3.65907%)

Pricing Matrix:1-Week Movement In 1-Month Term SOFR Cap Premiums

*Indications as of market open. Premium levels provided are indications only and subject to change.

^NOTE: 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.

HedgeWithAnEdge-TheRCAEdge!

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.