Rates Mostly Steady as Traders Pause to Assess a Host of Potential Market Catalysts

Flash Update: US RATE MARKETS – FRIDAY JULY 10, 2026

• UST yields and SOFR swap rates are holding mostly steady this morning as market participants anxiously assess the risk in the Middle East

• Traders appear to have headed to the sidelines for today to regroup and weigh a myriad of potential market catalysts

• Renewed hostilities between the US and Iran have cast doubt on the ceasefire agreement and rekindled fear of a return to war

• Markets remain extraordinarily patient; Oil prices are relatively steady and rates remain range bound

• According to the latest news reports, the two sides plan to meet this weekend to continue peace negotiations

• The US/Iran conflict remains the primary driver for the rate markets

• Next up for data: June CPI data will be released on Tuesday, 7/14 at 8:30 AM; June PPI & Retail Sales data will be released on Wednesday, 7/15 at 8:30 AM

• Short-term SOFR swap rates are trading flat to up ~1 bp this morning, depending on tenor

• Medium-term SOFR swap rates are flat to down ~1 bp currently, depending on tenor

• Long-end SOFR swap rates are trading flat to down ~1 bp this morning, depending on tenor

Good morning – US Treasury yields and SOFR swap rates are a holding mostly steady this morning, as traders head to the sidelines ahead of the weekend. Given the renewed uncertainty surrounding peace in the Middle East, the fragile truce between the US and Iran is keeping geopolitical risk front of mind for market participants. Currently, SOFR swap rates are flat to up ~1 bp on the short end of the curve; the belly of the curve and long-term swap rates are flat to down ~1 bp this morning.

Oil prices continue to creep higher, but not materially – as I mentioned yesterday, traders remain exceedingly patient with the conflict in the Middle East – that is what is keeping rates generally range bound this week. Brent crude oil traded near $76.50 a barrel this morning, swinging between gains and losses to extend a choppy stretch this week. According to news reports, talks between the US and Iran are continuing despite days of renewed fighting that led to a steep drop in traffic through the Strait of Hormuz. Talks between the two sides are expected to continue this weekend. I anticipate that the risk of further escalation will keep traders and investors cautious as they close out the week.

Overall, the market reaction to the headlines this week has been mostly muted – swap rates are slightly higher this week. The 2-year swap rate opened the week at 3.978% and is currently trading at 4.037% (+5.9 bps). The slight increase in rates has kept pressure on cap premiums this week. The uptick in swap rates this week tells me that market participants remain very worried about higher “war-induced” inflation. Perhaps a better way of saying that is they are worried that inflation will become entrenched. Typically, the impact of a conflict that involves the energy markets is usually short-lived. The longer this conflict drags on, the higher the potential for a more lasting impact. In my opinion, we are nearing that stage of this conflict – generally, I prefer to see these situations resolved inside of six months, and even that may be too long.

“Key News” the market is tracking includes:

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

• 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.

SOFR Swap Rate Summary: The 1Y SOFR swap rate is trading flat to up ~1 bp this morning. 2Y and 3Y SOFR swap rates are currently trading flat to down ~1 bp. 5Y and 10Y SOFR swap rates are trading flat to down ~1 bp this morning. The very back-end of the swap curve is currently trading flat to down ~1 bp 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: 9:30 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: SOFR SWAP RATES MOSTLY STEADY AS TRADERS WEIGH A HOST OF POTENTIAL MARKET CATALYSTS

SOFR swap rates are holding mostly steady this morning as traders head to the sidelines ahead of what could be a critical weekend for Middle East peace talks. For the week, swap rates are a touch higher across the curve, but nothing dramatic. The market is also looking ahead to key economic data set for release next week (CPI, PPI, Retail Sales), a slew of tech and corporate earnings reports printing next week and the continuing uncertainty regarding the US-Iran war. Potential changes within the FOMC are also captivating markets and adding to forward rate uncertainty.

The market is getting more practiced about reacting to rumors and headlines – that is a positive on some levels, but it also underscores that the market simply does not know what to believe! The ever-shifting rhetoric, “crying wolf” and unmet deadlines are creating a new level of market uncertainty regarding the outlook for the conflict in the Middle East. There does not seem to be a quick, or easy way out of the conflict for the US. I said it yesterday and feel it even more strongly after this week: Should tension in the Middle East ramp back up, rates are likely to continue to creep higher. If the ceasefire collapses and/or oil prices march higher, SOFR swap rates are likely to follow close behind.

US-IRAN WAR IMPACT: 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 ~4.037%(+82.7 bps).

• The 5-year SOFR swap rate closed at 3.22% on Friday 2/27 – it is currently trading at ~3.991%(+77.1 bps).

• The 10-year SOFR swap rate closed at 3.52% on Friday 2/27 – it is currently trading at ~4.124%(+60.4 bps).

CHART 2:Short-End SOFR Swap Rates – Year-To-Date 2026

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

CHART 2A:Long-End SOFR Swap Rates – Year-To-Date 2026

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

CHART 2B:US Treasuries: Yield Overview – Year-To-Date 2026

Source: StreetStats | US Treasury Yields; YTD 2026 (30Y UST yield – top line; 10Y UST yield – middle line; 2Y UST yield – bottom line)

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 7/10/2026

• Current 1-Month SOFR = 3.67529% (Prior Day’s Reset: 3.67035%)

• Rate volatility remains relatively subdued as the market weighs a host of market variables

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.

^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.