IGA Capital Weekly Economic & Markets Update
- Joshua Hawley
- 20 hours ago
- 2 min read
May 19, 2025
IGA Capital Finance Brokers, Joshua Hawley, CEO
Macroeconomic Overview
Markets remain highly sensitive to the Federal Reserve’s projected rate path and macro data prints. According to the latest forecasts, the 10-year Treasury yield rose to 4.54%, up 22 basis points from the previous week, as fixed income investors adjusted to continued resilience in economic activity and sticky inflation.
The Fed Funds Futures Curve implies rate cuts are still expected starting Q3, but the slope has flattened modestly. The implied policy rate drops from 4.31% in June to 3.70% by January 2026, with a cumulative 62 bps of easing priced in.
The Fed’s Dot Plot remains conservative, with a year-end median projection of 3.875%, signaling only modest divergence between market expectations and the Fed’s guidance.
Short-Term Rates & SOFR Forward Curves
Short-term funding remains elevated:
1M Term SOFR: 4.32% (unchanged from last week)
30-day Average SOFR: 4.327%
Effective Fed Funds Rate: 4.33%
The forward SOFR curve indicates a mild downward trajectory over the next 12 months, with 1-year forward SOFR expected at 3.503%, and 2-year forward at 3.475%, suggesting market confidence in the Fed’s gradual easing path.
Treasuries & Yield Curve Trends
Treasury yields moved up across the curve:
5Y UST: 4.10%
7Y UST: 4.30%
10Y UST: 4.54%
30Y UST: 4.99%
Swap spreads tightened across maturities, with the 10Y SOFR swap spread at -0.54%, a further 2 bps compression week-over-week, reflecting reduced credit and liquidity premiums.
Yield curve inversion remains evident in 2s/10s and 5s/30s, though the slope is steepening modestly YTD:
2s/10s: +0.54%
5s/30s: +0.89%
Multifamily & Agency Loan Pricing
Agency capital markets remain stable with modest widening in some tiers:
Fannie Mae 10-Year (Tier 2): 5.90%
Freddie Mac 10-Year (80% LTV): 5.71%
5-Year DUS Fixed (Tier 2): 5.73%
Floating Rate DUS: Call for spread indications
Loan spreads are at the wider end of the guide range. Market remains favorable for mission-driven assets and properties with DSCRs above 1.25x.
Real Estate Equities & Sector Insight
REITs posted strong gains across sectors:
Residential REITs: Nasdaq REZ up 3.3%
Mortgage REITs: REM up 11.8% led by Annaly (+13.3%) and AGNC (+15.7%)
Homebuilders ETF (XHB): +12.9%
Dow Jones U.S. Real Estate Index: +4.9%
Key outperformers included Mid-America Apartment Communities (MAA) and SL Green (SLG), suggesting investor preference for both Sunbelt growth and deep value in office conversions.
Inflation & Global Context
U.S. CPI YoY eased to 2.3%, a 10 bps drop from March. Breakeven inflation remains steady at around 2.2%, anchored by Fed credibility and stable commodity prices.
International yields are moving higher:
UK 10Y: 4.72%
Germany 10Y: 2.64%
Japan 10Y: 1.48%
Australia 10Y: 4.52%
Outlook
Investors remain cautiously optimistic. IGA Capital sees strong interest in structured finance, commercial real estate bridge-to-perm lending, and bank M&A deals in emerging markets. As global capital flows recalibrate to higher-for-longer yield expectations, clients should be actively reviewing forward rate caps, hybrid debt instruments, and fixed-to-floating options.
For specific transaction execution support, term sheets, or investor introductions, contact your IGA Capital advisor.
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