Trump 2.0: The First 100 Days | United States

Debt Spreads Will Likely Widen 10-Year Treasury Note vs. Commercial Debt Costs

Impact on CRE

• While President Trump is putting less weight on the stock market as a measure of his success, he has indicated a desire to bring down interest rates. • The decline in interest rates, however, is unlikely to meaningfully shift debt costs for CRE, as macroeconomic forces play an outsized role. • In previous recessions and periods of uncertainty, the 10-year Treasury has declined, though debt costs have either remain unchanged, or risen, reflecting the additional uncertainty. • Debt spreads initially widened in the days following the April 2 reciprocal tariff announcement but have since stabilized following the 90-day pause. • Long-term inflation expectations remain anchored, while near-term are rising. At the same time, the futures markets are pricing in more cuts — reflecting slower growth — which has translated into a 10-year Treasury market exhibiting signs that investors are pricing in a “ stagflationary- like” shock.

8%

500

450

7%

400

6%

350

5%

300

4%

250

200

3%

150

2%

100

1%

50

0%

0

Spread, RHS

10Y Treasury

RCA Commercial Debt Costs

2011-2024 Avg Spread, RHS

Source: Federal Reserve, MSCI Real Capital Analytics

CONTENTS

CONTENTS

Cushman & Wakefield