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Economy, the Fed, and Rates…

February 10, 2026

Economic Data & Labor Market

• A volley of labor data landed this week—and the picture is weaker than the Fed acknowledged seven days ago. The December JOLTS report showed just 6.5 million openings (vs. 7.25M expected), the lowest since 2020. ADP private payrolls added only 22,000 in January. Initial jobless claims spiked to 231,000 (+22,000), topping all estimates, though severe winter weather likely inflated the figure. Pantheon Macro’s Samuel Tombs said the Fed is “premature in its judgment that the labor market has turned a corner.”
• January layoff announcements hit 108,435—the highest for any January since 2009. Nearly half of the layoffs came from just three firms: UPS (~30,000), Amazon (~16,000), and Dow (~4,700). Hiring intentions fell 13% y/y to 5,306—the weakest January on record (Challenger). Bloomberg Economics argues the surge is too concentrated to signal a broader wave, but Indeed’s Cory Stahle warned the market looks “perilously close to a definitive breaking point.”
• White-collar openings are plummeting—and the bridge to higher unemployment is shortening. The BLS job-opening rate for finance workers fell to 2% in December—the lowest in the survey’s 15-year history, down from 7% in mid-2022. Professional and business services openings hit their lowest since April 2020. 
• Consumers look better in surveys than in financing behavior. Michigan sentiment rose to 57.3 (a six-month high), but gains were driven almost entirely by wealthier Americans with stock holdings; confidence among those without equity remained weak. Respondents assessed the highest probability of losing their own job since July 2020. December consumer credit surged $24 billion—revolving credit up $13.8 billion, the biggest monthly jump in over two years. Spending can look resilient when it’s debt-financed, but that makes it more rate-sensitive than headlines imply.
• International travel to the U.S. fell 4.2% in 2025—the first annual decline since the pandemic. The U.S. Travel Association estimates that ~$50 billion in spending will be lost due to roughly 11 million fewer visitors. Hotel RevPAR has been negative every month since April’s tariff blitz. Disney warned of “international visitation headwinds.” The structural damage—visa restrictions, border scrutiny, reputational decline—parallels the U.K.’s post-Brexit experience. Bank of America expects “anemic” hotel demand in 2026.
• Data calendar itself has become a volatility input. The partial shutdown pushed January payrolls to February 11 and CPI to February 13. The jobs report also carries annual benchmark revisions expected to show materially weaker prior job growth—Governor Waller said the revisions will reveal essentially zero employment growth in 2025.

Federal Reserve Policy & Fed Independence

• Warsh's call for a new Fed-Treasury "accord" adds an institutional layer — and a warning. Deutsche Bank sees Fed holdings shifting toward T-bills (up to ~55%, from under 5% today) over five to seven years; Bessent signaled patience, saying he expects the Fed to "take at least a year" to decide its path. But critics warn the accord framework could backfire. SGH Macro's Duy: "A public agreement that synchronizes the Fed's balance sheet with Treasury financing explicitly ties monetary operations to deficits"—effectively yield-curve control dressed up as independence. Columbia Threadneedle's Al-Hussainy was blunter: if the accord implies the Treasury can count on the Fed buying "some portion of the curve for the foreseeable future, that's hugely problematic."
• Multiple Fed voices reinforced a cautious stance despite weakening labor data. Vice Chair Jefferson said he was “cautiously optimistic,” arguing productivity growth could return inflation to 2% and tariff pass-through would prove temporary. Governor Cook was more hawkish: risks are “tilted toward higher inflation,” and after “nearly five years of above-target inflation, it is essential that we maintain our credibility.” The committee is split on whether labor softness or inflation persistence is the bigger risk.
• Waller broke ranks—and his read of the labor market is sharply different from Powell’s. The governor dissented in favor of a cut at the January meeting, arguing benchmark revisions will show virtually no employment growth in 2025: “Zero. Zip. Nada. This does not remotely look like a healthy labor market.” Bostic, meanwhile, pushed back on Bessent’s claim the Fed has “lost the trust of the American people,” citing stable inflation expectations as evidence the public still has faith. Futures now price the first cut by June—a month after Powell’s term ends—with two to three total cuts this year.
• The Warsh balance-sheet debate moved from academic to operational this week. The FT's Unhedged column explored "privatizing" the Fed's $6.6 trillion balance sheet—resuming QT while incentivizing banks to absorb Treasuries via looser capital rules. Strategas's Clifton was direct: bank regulatory policy now exists to "generate demand for U.S. Treasuries to help the government fund itself." The risk: loading duration onto banks recreates SVB-style rate risk; the alternative—short-term issuance with forced low rates—ends in fiscal dominance and a dollar collapse (as Martin Wolf noted).

Treasury Yields, Markets & Credit

• The curve steepened sharply and it’s the story that matters most for borrowers. Closing levels (Feb. 6): 2-year at 3.50%, 10-year at 4.21% (−3 bps on the week), 30-year at 4.85% (−2 bps). The 2s/10s spread hit 74 bps intraweek—just shy of the April 2022 high before settling around 71 bps Friday.
• This is not normal “growth optimism” steepening. Labor weakness is pulling the front end down while fiscal concerns and the Warsh balance-sheet agenda hold the long end up. AGF’s Nakamura called it a global phenomenon—curves are steepening in Japan, Germany, the U.K., and Canada as governments add fiscal stimulus—but the U.S. has more room to widen given worries about White House interference with Fed independence. Barclays’s Pradhan expects further steepening; Nuveen’s Cooper sees it led by the long end on sticky inflation and heavy borrowing.
• The transmission problem: Fed cuts may not reach long-term borrowers. A steeper curve means mortgages, auto loans, and corporate financing benchmarked to 10- and 30-year yields won’t move in lockstep with policy-rate cuts. The only scenario that flattens the curve meaningfully is labor deterioration severe enough to drag inflation expectations lower. Evercore’s Casiraghi says unemployment would need to rise to ~4.6% to put a March cut in play.
• AI disruption risk is now a first-order credit concern. Apollo’s Zito asked: “Is software dead?” From 2015–2025, PE took 1,900+ software companies private for $440+ billion. Barclays estimates BDCs have ~20% software exposure; actual figures are likely much higher. Apollo cut its direct-lending software exposure roughly in half during 2025. UBS warns private credit defaults could hit 13% under aggressive AI disruption. Oaktree’s Howard Marks warned of an eventual data-center glut.

CRE Finance Market Implications

• Curve steepening creates a split market for CRE financing. Floating-rate borrowers (bridge, construction) benefit from front-end repricing: if two to three cuts arrive in H2 2026, SOFR-based coupons could decline 50–75 bps. But permanent fixed-rate financing benchmarked to the 10- and 30-year sees little improvement as fiscal concerns and the Warsh balance-sheet agenda may keep term premium elevated. All-in CRE mortgage coupons remain in the high-5% to mid-6% range; curve shape is doing more work than rate level.
• Insurance costs are becoming a structural threat to affordable housing. Enterprise Community Partners reports premiums jumped 25%+ for many affordable housing providers in 2023 (according to a report published this week), with some rates doubling. Rising operating costs have already driven some operators into bankruptcy. Market-rate landlords face the same pressure and are passing costs to tenants or deferring maintenance. Enterprise’s Donovan: “This is not today’s crisis—this is also tomorrow’s crisis.”
• White-collar hiring freeze and tourism decline hit specific property types. Finance and professional services openings at multi-year lows weaken the demand story for urban office—the 4.2% drop in international visitors and negative hotel RevPAR since April pressure hospitality.

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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Collaboration in Focus: Highlights from the CREFC Servicer/Investor Roundtable

February 10, 2026

CREFC’s President and CEO Lisa Pendergast recently hosted the trade association’s latest industry roundtable, bringing together Master and Special Servicers with Bond Investors to foster dialogue and build consensus across the commercial real estate finance landscape.

The gathering featured a robust lineup of industry leaders. 

• Servicers were represented by firms including Berkadia, CW Capital, K-Star, KeyBank, LNR Partners, Midland, Situs, and Trimont. 
• Bond Investors in attendance included representatives from Alliance Bernstein, DWS, Ellington, JP Morgan, Lord Abbett, MetLife, Prime Finance, Torchlight, and Webster Bank.

Common Ground and Constructive Dialogue

The evening’s discussion was characterized by a spirit of collaboration. Participants moved beyond individual interests to identify shared challenges and potential solutions for the broader market.

What they're saying: "The discussion at the table left me believing that we have more in common than we do in conflict," noted Adam Smith, Director at DWS Group and Chair of the CREFC Investment Grade Bondholders Forum. "I found it very worthwhile to identify shared pain points and agree they should be addressed."

Key Discussion Points

The conversation spanned high-level market trends and specific operational improvements, including:

• Macro Market Outlook: The current status and future trajectory of the Conduit, SASB, and CRE CLO sectors.
• Operational Enhancements: Improving the reporting processes for property releases.
• Technical Resolutions: Streamlining non-recoverable determinations to ensure market clarity.

Dana Jo Martino, SVP – Managing Director, Asset Management Servicing at Berkadia and co-Chair of the CREFC Servicer Forum, emphasized the value of these face-to-face interactions, stating:

"Our roundtable proved that when we combine diverse expertise with candid conversation, real solutions emerge," she said. "The meeting was both collaborative and highly productive, reinforcing the value of working together to address the challenges ahead."

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CREFC Forums provide a platform for members to shape industry standards and solve complex market issues.

Click here to learn more and join a CREFC Forum.

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CREFC to Convene Commercial Real Estate Finance Leaders at High Yield, Distressed Assets, and Servicing Conference in New York

February 10, 2026

NEW YORK, NY — February 10, 2026 — The CRE Finance Council (CREFC) once again plans to bring together leaders from across the commercial real estate finance ecosystem at its High Yield, Distressed Assets, and Servicing Conference on March 10, 2026, at the New York Athletic Club.

This one-day conference convenes servicers, alternative lenders, investors, and all capital markets participants focused on commercial real estate debt, with a particular emphasis on high yield strategies and sub-performing and non-performing loans. The program reflects the evolving dynamics of credit markets as private capital expands its footprint, asset classes diverge in performance, and loan maturity pressures continue to reshape investment and servicing strategies.

As the recognized voice of the commercial real estate finance industry, CREFC represents lenders, investors, issuers, servicers, and market participants across the capital stack. Through its research, policy advocacy, and member-driven programming, CREFC provides a forum for the industry’s most timely and candid discussions.

“The commercial real estate market is moving into a phase in which credit conditions, asset performance, and capital availability are no longer moving in lockstep,” said Lisa Pendergast, President and CEO of CREFC. “Private credit continues to expand its role in the lending stack, while traditional lenders adjust to a more complex risk environment. At the same time, asset stress and opportunity are emerging unevenly across property types.

“This conference brings together servicers, alternative lenders, and high yield investors operating across commercial real estate debt and equity to examine how these forces are reshaping the market in real time. Our 2026 program includes sessions tailored to the expertise of market participants, with deep dives into the expansion of private credit, signals in the New York City office recovery, multifamily opportunities and challenges, evolving dynamics in hospitality, and innovative approaches to servicing.”

Key sessions at the High Yield, Distressed Assets, and Servicing Conference include:

• Private Credit Expansion: Evolving Players in the Debt Stack
• NYC Office: Separating Signal from Noise in the Recovery
• The NYC Multifamily Squeeze: Managing Opportunities
• Heads in Beds, Stress in the Stack: Hospitality Deep Dive
• Beyond the Box: Servicing Complex and Emerging CRE Assets
• Reimagining Urban Real Estate: One-on-One with GFP’s Brian Steinwurtzel

CREFC gratefully acknowledges the support of our conference sponsors, including Partner Sponsor Holland & Knight.

Event Details:

• When: March 10, 2026
• Where: New York Athletic Club | 180 Central Park South | New York, NY 10019
  
• Conference Program 
  
• Registration

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