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Mamdani’s Primary Win in NYC and What It May Say about National Politics

July 1, 2025

Queens Assemblyman Zohran Mamdani clinched the Democratic nomination for New York City mayor, defeating former state Governor Andrew Cuomo in the June 24 primary. With 93% of votes counted, 33-year-old Mamdani led with 43.5% to Cuomo’s 36.4%, prompting Cuomo to concede the race.

• His campaign focused on affordability for working-class New Yorkers, proposing initiatives like freezing rents for rent-stabilized apartment owners, free public transportation, universal childcare, and the construction of 200,000 affordable housing units
• Mamdani’s political career began with a successful bid for the New York State Assembly in 2020. He represents Queens’ 36th District. His endorsements from prominent progressives such as Bernie Sanders and Alexandria Ocasio-Cortez further bolstered his appeal. 

According to Jacobin, this primary race vindicates an economic-populist strategy that embraces bread-and-butter economic issues some Democrats have advocated for:

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Economy, The Fed and Rates

The Economy, the Fed, and Rates…

• May inflation slightly hotter: Core PCE rose 0.2% m/m (vs 0.1% expected), with the annual rate at 2.7%. Overall PCE rose to 2.3% y/y, up from a revised 2.2%. Consumer prices overall rose 0.1%, lifting the annual rate to 2.3%.
• Consumer spending weakened: Personal spending fell 0.3% in real terms for May, down from April’s 0.1% increase. Personal income fell 0.4%, the most since 2021, reflecting a reversal of April’s Social Security payment spike.
• Q1 GDP revised lower: GDP contracted at a -0.5% annual rate vs a second estimate of -0.2%. Personal consumption rose just 0.5% vs. a second estimate of 1.2%, marking the weakest pace in almost two years.
• Labor market cooling gradually: Initial jobless claims fell to 236,000, but continuing claims rose to 1.97 million for the week ended June 14 - the highest since November 2021. This suggests employers are slowing hiring rather than laying off workers.
• Consumer sentiment rebounds: The University of Michigan Consumer Sentiment Index jumped to 60.7 from 52.2, an 8.5-point increase and the largest since the start of 2024. One-year inflation expectations improved to 5% from 6.6% in May.

Federal Reserve Outlook

• Market anticipates a more dovish post-Powell Fed: Traders are pricing in five quarter-point rate cuts by year-end 2026, betting that a Trump administration appoints a more accommodative Fed chair after Powell’s term ends in May 2026.
• Diverging Fed voices: Fed Governors Waller and Bowman favor a July rate cut, downplaying tariff-driven inflation, while Chair Powell advocates waiting until fall for more clarity on inflation trajectories.

Market Dynamics & Treasury Yields

• Stocks defying skeptics: The S&P 500 hit a fresh record high, completing a 27% rally from April lows. The recovery reflects confidence that Trump will moderate his most aggressive tariff threats and that the economy can weather current uncertainties.
• Bond market sending warning signals: The 10-year Treasury yield remains elevated at around 4.28%, up about 60-70 bps above last September’s lows. This persistence despite rate cut expectations reflects growing concerns about fiscal sustainability and inflation risks.
• Dollar weakness raises alarm: The dollar fell to a three-year low, breaking its traditional positive correlation with Treasury yields. Citadel’s Michael de Pass warned that this divergence reflects questions about U.S. “institutional integrity” and policy predictability.
• Corporate bonds resilient: The gap between corporate bond yields and Treasuries is near the tightest since 2005, reflecting investor confidence in the Fed achieving a "soft landing." Foreign investors bought about $45 billion of US corporate notes in April, the most in six months, according to Citigroup's analysis of Treasury data.

Implications For the CRE Finance Market

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Bank Capital Regulatory Update

July 1, 2025

Banking regulators are starting to move ahead with reframing U.S. bank capital standards. 

• On June 25 and June 26, the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC), respectively, voted in open sessions to issue for comment proposed amendments to the enhanced Supplementary Leverage Ratio (eSLR) applicable:
  • The proposal calls for replacing the current eSLR, which requires globally systemically important banks (GSIBs) to hold additional capital equal to 2% of their total exposures, with a new capital charge, equal to one-half of each bank's GSIB surcharge.
  • Comments are due August 26.
• The joint banking agencies, including the Office of the Comptroller of the Currency (OCC), on June 27 officially requested comment on the proposal. One of the proposal’s key goals is to reduce disincentives for banks to engage in lower-risk activities, thereby encouraging the smoother functioning of U.S. Treasury markets.
• Two Federal Reserve Board members, Adriana Kugler and Former Fed Vice Chair of Supervision Michael Barr, voted against issuing the proposal, sharing their concerns about the potential impact on bank capital. According to Barr:

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