Interest rates staying low, despite inflation

<h1><strong><span style="font-size: 12pt;">Snapshot report</span></strong></h1> <h1>Bank of England holds rates at record low</h1> <p>Commercial real estate borrowers will be happy to hear that despite the Fed announcement of tapering of $15 billion a month, rates did not go up last week. They fell across the curve.</p> <p>Jay says a Bank of England announcement last week may have influenced rates in the U.S. On Thursday, the Bank of England said that it would not increase short-term rates, contrary to expectations. And that really started a fall in rates in the U.S.</p> <p>The Ten-year swap rates closed the week at 1.48, down nine basis points on the previous week. So there’s a bit of a steepening of the curve. Jay also presents LIBOR, BSBY, and term SOFR rates during his segment of the podcast episode.</p> <h1>Rates to increase at a very slow rate?</h1> <p>Jay also explores current economic circumstances and explores whether the market may be entering a period of very slow rate increases, as happened back in 2015.</p> <p>“The market is taking a more dovish approach to rates; we saw it in the drop across the curve last week,” adds Jay. </p> <p>Swap rates reached a one-year high last week after starting to come down towards the end of last week.</p> <p>Economic data was fairly positive last week, with higher-than-expected jobs numbers.</p> <p>Jay says when you dig into those numbers, there was actually a decline in governmental jobs, which makes the increase in private payroll even more impressive.</p> <h1>Expect choppiness and volatility</h1> <p>Jeff agrees with Jay, adding that commercial real estate borrowers can still expect some volatility in the markets in the coming year.</p> <p>Jay says that Thirty Capital is seeing tremendous volume in the short-term hedging interest rate caps, driven by some CLO products. He adds that a lot of commercial real estate borrowers are trying to get a product originated this year before LIBOR goes away - giving about two or three more weeks to really get the process started.<