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Economy, the Fed, and Rates…

May 12, 2026

Economic Data & Labor Market

• April payrolls beat, but the labor signal is uneven. Employers added 115k jobs in April, versus 65k in the Bloomberg consensus and 55k in the WSJ consensus. March reading was revised up to 185k, while February was revised down to a 156k loss. The unrounded unemployment rate ticked up to 4.34% from 4.26%, U-6 rose to 8.2%, and participation fell to 61.8%, the lowest since October 2021. The headline says resilience; the internals say caution.
• Hiring broadened, with freight doing much of the work. Healthcare and social assistance added 54k, transportation and warehousing 30k, retail 22k, and couriers/messengers nearly 38k, the largest gain since 2020. Bloomberg Economics sees the freight gain as evidence of stronger industrial momentum. Still, some of it likely reflects oil exports, rerouting, inventory hedging, and trade adjustment rather than a clean cyclical reacceleration.
• Information-sector losses remain the clearest AI-adjacent warning. Information employment fell for a 16th straight month and is down ~342k, or 11%, from its November 2022 peak. The packet does not prove AI is the sole driver, but tech-sector cuts and information-sector weakness remain where labor substitution is most visible.
• Consumer sentiment is the recession-looking data point. Preliminary May UMich sentiment fell to 48.2 from 49.8, a fresh record low. Current conditions hit their lowest level on record, and consumers’ view of their current financial situation fell to the lowest since 2009. One-year inflation expectations eased to 4.5% and 5-to-10-year expectations to 3.4%, but both remain elevated.
• Productivity helps, but does not solve inflation. 1Q productivity rose 0.8% annualized and 2.9% YoY, the strongest annual pace since 2024. Unit labor costs rose 2.3%. The labor share of nonfarm business output fell to 54.1%, the lowest in the series dating back to 1947. Inflation pressure points include energy, imports, freight, and pass-throughs, not wages overheating.

Federal Reserve Policy & the Warsh Transition

• The payroll report keeps the Fed focused on inflation. April hiring was strong enough to remove the urgency to cut. Money-market pricing now implies the Fed stays on hold through year-end 2026, with some hedging for a possible 2027 hike. The next test is April CPI, with Bloomberg Economics expecting 0.6% MoM headline, 3.7% YoY headline, 0.4% MoM core, and 2.7% YoY core.
• The FOMC’s easing bias is under attack. Logan, Hammack, and Kashkari dissented from the April 29 statement language, suggesting the next move would more likely be a cut. Hammack called that language “a little bit misleading.” Collins, a non-voter, agreed the statement should be more agnostic and said she would strongly consider a hike if inflation moved materially in the wrong direction.
• Warsh inherits a harder committee than markets initially priced. Warsh may prefer easier policy and balance-sheet reform, but he will face a visible hawkish bloc if he chairs the June 16-17 meeting. Bloomberg Intelligence’s practical point: Warsh will need time and persuasion before cuts become viable.
• Goldman moved its first cut to December 2026. Goldman pushed expected Fed cuts to December 2026 and March 2027, delayed by one quarter, because energy pass-through is likely to keep core PCE closer to 3% than 2% through year-end. Goldman lowered its 12-month recession probability to 25% from 30%, still above its 20% pre-war estimate.
• The global central-bank split is widening. Norway delivered a surprise 25 bp hike, its first since 2023, and Australia has hiked at three consecutive meetings. The Fed is not Norway or Australia, but the G10 backdrop makes a simple “Warsh cuts quickly” story harder to defend.

Treasury Yields & Bond Markets

• Treasuries ended mixed, not in a clean selloff. Per Bloomberg Friday closes, the 2-year was flat on the week at 3.88%, the 10-year down 2 bps to 4.35%, and the 30-year also down 2 bps to 4.93%. The 30-year briefly broke above 5% earlier in the week before duration buyers stepped in. It remains only 16 bps below its 52-week high.
• The curve message is less panicked, not easier. The front end remains elevated because cuts are not imminent; the long end eased because buyers stepped in near 5%, and oil slipped. For CRE, a 10-year at 4.35% still keeps fixed-rate financing costs elevated.
• CPI and refunding are the next rate tests. Bloomberg Economics expects another hot headline CPI print, with gasoline up another 7% after March’s 21% increase. Treasury also has a heavy auction schedule: $58B of 3-year notes, $42B of 10-year notes, and $25B of 30-year bonds.

Dollar, Commodities & Market Dynamics

• Equities keep looking through the shock as earnings and AI dominate. The S&P 500 closed at a record and posted its sixth straight weekly gain; the Nasdaq Composite logged its 11th record close of 2026. Roughly 82% of S&P 500 companies have beaten 1Q profit estimates, and chipmakers rose 11% on the week.
• Oil eased, but Hormuz still controls the macro tape. WTI closed Friday at $95, down on the week, while Brent was near $100 in the Bloomberg Briefs snapshot. The U.S. and Iran are working through mediators on a framework for talks, but fresh clashes near Hormuz show the ceasefire path remains fragile.
• Inflation pressure is broadening beyond crude. The UN food-price index rose 1.6% in April to its highest level in more than three years. Bloomberg Economics expects April PPI to be 0.6% MoM and 4.9% YoY, with transportation and warehousing the largest core contributor, driven by diesel, jet fuel, and stronger freight activity. Import prices are expected to rise 0.9%, with ex-petroleum up 0.6%.

CRE Finance Market Implications

• Floating-rate borrowers have less near-term hope. Markets now price the Fed on hold through year-end 2026, and Goldman pushed its first expected cut to December 2026. That delays SOFR relief for bridge and transitional loans.
• Inflation is hitting CRE through freight, fuel, and construction inputs. Expected April PPI strength in transportation and warehousing, import-price pressure, food-cost increases, and energy-linked materials all flow into operating expenses and development budgets.
• Data centers remain strongest CRE demand engine, but the benefit is narrow. AI-linked spending supports data centers, power, equipment, and logistics demand. But broader CRE does not automatically share in that capital-market tailwind; non-data-center development and transitional deals still face selective lenders, higher coupons, and tougher refinancing math.

You can download CREFC's one-page MarketMetrics, which includes statistics covering the economy and the CRE debt capital markets, here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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Trump Urges Passage of Senate Housing Bill

May 12, 2026

Last night, President Donald Trump urged the House to swiftly pass the Senate version of the 21st Century ROAD to Housing Act (H.R. 6644) that includes a ban on large institutional investors owning single-family rental (SFR) housing. 

Why it matters: Trump has remained largely silent on the issues since the Senate passed the bill 89-9 on March 12. The House has delayed considering the bill after objections to the treatment of build-to-rent (BTR) properties and other provisions; the committee had been close to releasing amended text. 

Go deeper: We have previously covered the Section 901 provisions passed in the Senate that would ban investors from owning 350 or more SFR homes.

• While the purchase ban would exempt BTR, it would force owners to sell new BTR to consumers within seven years.
• The bill also would have unintended consequences on other forms of multifamily housing and create a confusing compliance regime. Reports indicate that BTR investment has slowed or stopped in some areas. 
• The Senate passed the provision unchanged despite strong objections from the real estate industry, including homebuilders.

Yes, but: The House continues to work on its counteroffer to the Senate bill. Reports from Politico over the weekend indicate the Section 901 ban on large institutional investors ownership of single family rental homes is likely to change in a House version. 

• A bipartisan group of 76 House members sent a letter to leadership last month indicating their opposition to the BTR provisions.
• No official text has been released and it is not clear that House GOP and Democratic negotiators have signed off on the final text. 
• The reported GOP amendments would eliminate the seven-year build-to-rent (BTR) divestment requirement and revise the definition of single-family home. 
• If an amended bill is released this week, the House could vote on the bill as soon as next week. 
• It is not clear if or when the Senate would act on a changed housing bill should the House pass an amended bill.

What they’re saying: Prior to Trump’s post, Politico reported President Donald Trump has privately expressed his opposition to the seven-year BTR divestment and considered posting his thoughts before backing down.

• The President’s reported hesitancy bolstered the House position against the Senate, but the latest post may derail changing the bill. 
• House leadership has not yet responded to the President’s demand. 
• The SFR ban has been the White House’s central demand to any housing bill, though the Senate language went far beyond the January 2026 executive order. 

What's next: CREFC and other industry groups continue to work with lawmakers and staff on Section 901 issues and the broader housing bill. 

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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Redistricting Update: Court Decisions Upend More Congressional Maps

May 12, 2026

Early polling on the 2026 generic congressional ballot shows Democrats with a consistent national edge of four to six points, and in a favorable position to retake the House. However, with two recent court victories, Republicans have improved their chances of holding onto the House. 

• These two actions taken together give the GOP a double digit advantage from redistricting, and have left Democrats reeling.
• Democrats are still favored to win control given the historic and current political tailwinds, but they will not be able to count on as many safe seats.

On May 8, the Virginia state supreme court invalidated the referendum that voters had approved just a few weeks prior.

• This reversed the new 10-1 map that would have netted Democrats four more seats. Instead, the current 6-5 map is likely to be in effect this fall, though two of those GOP seats are in play.

As we covered last week, the Supreme Court struck down Section 2 of the Voting Rights Act in a 6-3 decision.

• The Court held that Section 2 of the Voting Rights Act (VRA) of 1965 only applies to “intentional” racial discrimination in the drawing of congressional maps.
• This ruling invalidated the provision that required minority voters not be divided into multiple districts in a manner that dilutes their voting power.
• Consequently, many southern states with large minority populations immediately began efforts to redraw their maps in ways that were not previously legal prior to the ruling.
• The maps in southern states are likely to face legal challenges and there is still a chance that redrawn maps in multiple states could be invalidated prior to election day.

The big picture: Over the past year, Republican states across the country began a flurry of redistricting at the direction of President Trump to try and shore up GOP seats ahead of the 2026 midterms. Democrats responded with their own efforts in California and Virginia.

By the numbers: Thirteen states that have enacted new maps or are currently working on passing new maps are listed on the chart below. 

Source: Cook Political Report *The maps have not been formally approved, but are currently under consideration within the state legislatures. **In Virginia, the state put a new map before voters and it was approved via special election but struck down by the Virginia Supreme Court on May 8.*** Legislation has been signed into law but is currently being litigated at the Missouri Supreme Court in multiple lawsuits. 

• Notably, in Missouri, the bill to redraw the maps has been signed into law, but is being litigated at the Missouri Supreme Court in multiple cases. These cases both challenge the legitimacy of the map and the referendum language that was put in front of voters last year.
  
• The projected delegations are the most optimistic totals based on historical voting data that each party has claimed their new map will help flip.
  
• If these maps hold, the net gain of all redistricting efforts will be a thirteen seat gain for the GOP, assuming similar voting patterns.
  
• Yes, but: State lawmakers have had to break up very safe seats in some cases, which could make other districts more vulnerable in cycles that heavily favor one party. 

The bottom line: Early polling on the 2026 generic congressional ballot shows Democrats with a national edge. 

• As President Trump’s approval ratings are stuck in the 30’s, the environment for Democrats to retake the House looks promising. 
  
• Republicans have narrowed the margin of victory possible for Dems through redistricting, but Democrats remain the favorites to retake control this fall.
  

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