US & Iran Agree on Interim Peace Accord

Flash Update: US RATE MARKETS – MONDAY JUNE 15, 2026

• UST yields and SOFR swap rates are ticking lower this morning on news that an interim peace accord between the US and Iran has been reached

• The announcement is very good news for global markets, though it will take some time for energy markets to recover

• Traders remain cautious – there is still a healthy dose of skepticism surrounding how long the peace accord between the two sides will last

• The US/Iran conflict remains the primary driver for the rate markets, though market sentiment is improving

• Fed officials remain within the “quiet period” ahead of this week’s FOMC meeting, Kevin Warsh’s first as Fed Chairman

• Market pricing now reflects that traders anticipate the next Fed “move” to be a rate hike

• The next FOMC rate decision is due on Wednesday, June 17th at 2:00 PM

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

• Medium-term SOFR swap rates are down ~3-4 bps currently, depending on tenor

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

Good morning – US Treasury yields and SOFR swap rates are ticking lower this morning on news that an interim peace accord has been reached between the United States and Iran. Oil prices dipped this morning, and rates followed closely behind. Traders remain cautious and are not overreacting to the announcement. There is still plenty of market apprehension and uncertainty surrounding the peace agreement, mainly centered on how long it will last and how effective it will be in calming regional flare-ups. The two-sides sill have much to discuss. That said, market sentiment has improved dramatically since the beginning of last week. The peace accord news was well received by market participants and investors.

It will take some time for the market to be convinced that the interim agreement will lead to a more permanent end to the conflict. It will also take time for the rate markets to recover from the “war induced” shock to the energy markets. I do not expect rates to “gap” lower but rather to gradually decline as the “overhang” from the war slowly dissipates. Clearly, that assumes that there will be no setbacks and forward progress will continue.

I think the current market sentiment can be described as “cautiously optimistic”. For now, rates are likely to continue to drift lower, but not dramatically – last Monday, the 2Y SOFR swap rate closed at ~4.021% - it is now trading at ~3.901% (down ~12 bps). That has provided some relief for cap premiums that had surged to 12-month highs during what we hope was the peak of the conflict. Rates are down across the curve this morning.

Markets are also looking ahead the FOMC rate announcement due Wednesday at 2:00 PM, Kevin Warsh’s first as FOMC Chairman. Market expectations almost unanimously expect the Fed to hold the benchmark rate steady. However, given the shifting dynamics of the US-Iran conflict and considering the dissension we saw at the last Fed meeting, markets will be very interested in the committee’s official statement, and even more interested in what Mr. Warsh will reveal during his first press conference as FOMC Chairman. More on the Fed coming in tomorrow’s update.

“Key News” the market is tracking includes:

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

• Kevin Warsh begins his term as Fed Chairman. He will oversee his first meeting as FOMC Chairman on Wednesday 6/17. From the market’s perspective, there are still many questions surrounding both Mr. Warsh’s monetary policy views and his plans for the central bank.

• Market participants continue to 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.

• 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 down ~2-3 bps this morning. 2Y and 3Y SOFR swap rates are currently trading down ~3-4 bps. 5Y and 10Y SOFR swap rates are trading down ~3-4 bps on the day. The very back-end of the swap curve is currently trading down ~1-3 bps from Friday’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: 9:30 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)

UST YIELDS | SWAP SPREADS | SOFR SWAP RATES

Source: Bloomberg, LLP | 9:30 AM NY Rates Snapshot

CHART 2, 2A, 2B & 2C: SOFR SWAP RATES DIP ON INTERIM MIDDLE EAST PEACE AGREEMENT

SOFR swap rates are ticking lower this morning on news received this weekend that an interim peace accord had been reached between the United States and Iran. The news pushed oil prices lower, and rates followed. Traders remain cautious – keep in mind this is only an interim peace accord – there are likely some contentious negotiations on the horizon. There is also a healthy dose of skepticism remaining in the market surrounding how long the deal will last and how effective it will be ultimately. I think for markets, the “proof” will be in how long it takes the Strait of Hormuz to resume “normal” commercial operating levels. So long as crude oil is moving through the Strait of Hormuz, market participants are likely to stay patient while “final” negotiations between the two sides continue.

Rates are likely to be biased lower this week, although I do not see rates plummeting – we are likely to see a more gradual decrease as peace milestones are reached and the “overhang” from the war slowly dissipates. There is still a long way to go until this conflict is resolved to the satisfaction of market participants and investors.

Key SOFR 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 ~3.901%(+69.1 bps).

• The 5-year SOFR swap rate closed at 3.22% on Friday 2/27 – it is currently trading at ~3.895%(+67.5 bps).

• The 10-year SOFR swap rate closed at 3.52% on Friday 2/27 – it is currently trading at ~4.054%(+53.4 bps).

CHART 2:Short-End SOFR Swap Rates – Since 2/27/2026 (Start of War)

Source: Bloomberg, LLP | 1Y (white), 2Y (blue) & 3Y (orange) SOFR SWAP RATES; SINCE 2/27/2026

CHART 2A:Long-End SOFR Swap Rates – Since 2/27/2026 (Start of War)

Source: Bloomberg, LLP | 5Y (green), 7Y (purple) & 10Y (light blue) SOFR SWAP RATES; SINCE 2/27/2026

CHART 2B:US Treasuries: Yield Overview, Prior 6-Months

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

CHART 2C:US Treasury Yields Dip on Latest Iran News

Source: Bloomberg, LLP | 2Y & 10Y US TREASURY YIELDS SINCE MAY 18, 2026

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.

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, 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 6/15/2026

• Current 1-Month Term SOFR = 3.63312% (Prior Reset: 3.62539%)

• Cap premiums are opening lower this week, as an interim peace accord between the US and Iran has been reached

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 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.

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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.