Treasuries Yields Spike, CMBS Rally Cools

The 10 year Treasury spiked to 1.85% today as traders sold off during the Fed’s “blackout” period in advance of next week’s meeting, and continued firming up of oil prices. The futures markets show a 1% chance of a rate rise this month, a 16% chance in June, and Sept-Dec at about “even money” for a single rise. CMBS:  After the rally that saw the 10 year AAA bonds tighten from T+165 to T+129, last week saw a slight widening up to about T+133. B-piece buyers and rating agencies continue to by hyper-vigilant with originators subject to “haircuts” and “kickouts” for loans with perceived credit issues. “Inside the fairway” and low leverage loans are being priced aggressively with all-in rates under 5.00%.   Stay Tuned.   David R. Pascale, Jr.