News

Economy, the Fed, and Rates…

November 18, 2025

 

Economic Data & Labor Market

  • The 43-day shutdown created unprecedented statistical blindness over the U.S. economy. The BLS confirmed that the September jobs data will be released on November 20, but October’s CPI “likely won’t be published,” according to White House officials. Former BLS commissioner Erika McEntarfer noted the impossibility of retroactive price collection: 

You can’t just walk into a Costco in mid-November and find out what the price of a good was in October.
  • Data gaps will persist through spring 2026, with measurement errors in CPI housing surveys—accounting for over one-third of the survey’s weight—potentially reverberating for six months. Bloomberg Economics estimates the shutdown shaved 1.3 percentage points from Q4 GDP growth, bringing it to near zero at 0.5%.
  • Jobless claims remained remarkably stable during the shutdown, holding between 218,000 and 228,000, suggesting the labor market hasn’t cratered despite some hiring freezes. However, major layoff announcements accelerated, with Verizon becoming the latest to announce widespread cuts, joining a flurry of companies signaling workforce reductions.

Federal Reserve Policy

  • Fed hawks seized the narrative on December cuts, with Kansas City’s Jeff Schmid warning that further easing “could have longer-lasting effects on inflation as our commitment to our 2% objective increasingly comes into question.” Boston’s Susan Collins echoed concerns that additional cuts risk “slowing – or possibly even stalling – the return of inflation to target.”
  • Markets dramatically repriced December expectations of a rate cut from near-certainty to a 50-50 coin flip, as multiple officials expressed skepticism or outright opposition. The divide reflects what Evercore ISI’s Krishna Guha called a potential “crisis of governance at the Fed,” with officials split between employment concerns and inflation risks.
  • Powell faces his toughest consensus-building challenge heading into the December 9-10 meeting without October unemployment data or CPI readings. As he noted, 
What do you do when you’re driving in the fog? You slow down.

Treasury Yields & Money Markets

  • 10-year yields climbed to 4.15%, supported by softer jobs/consumption, and rate-cut expectations; deficit concerns linger but weren’t the week’s main driver.
  • More concerning: Tri-party repo rates jumped 10 basis points above the Fed’s reserve rate, signaling money-market stress last seen in late 2018-2019. New York Fed President Williams convened emergency dealer meetings about the Standing Repo Facility amid mounting funding pressures.

Market Dynamics & AI Infrastructure
 
  • The AI data center boom shifted from cash to debt financing, with tech giants raising over $100 billion in bonds this year. Oracle’s $18 billion September issuance and Meta’s $30 billion deal set records, while Alphabet raised $25 billion last week—all marking the end of big tech’s balance sheet fortress era.
  • Asset-backed securities hit record volumes at $337.9 billion year-to-date, with data center and fiber infrastructure ABS jumping 86% to $23.1 billion. JPMorgan estimates the total AI infrastructure bill at $5 trillion, warning that even with $300 billion in high-grade bonds next year, private credit and government funding must fill a $1.4 trillion gap.
  • Corporate credit spreads diverged sharply by quality: Alphabet’s 30-year spreads remain below 100 basis points, while Oracle’s 1-year CDS cost is ~$0.88 per $100 notional (≈0.88%), roughly double the September read. The market is discriminating aggressively based on balance-sheet strength.

    CRE Finance Market Implications

    • Money market dysfunction threatens CRE refinancing as repo market stress signals tighter funding conditions ahead. With tri-party rates elevated and the SRF seeing limited usage despite Fed encouragement, warehouse lenders face rising costs that will flow through to mortgage pricing.
    • The data vacuum complicates underwriting through Q1 2026. Without reliable inflation metrics or employment data, lenders lack crucial inputs for rate projections and stress testing. The housing component measurement errors particularly affect multifamily and residential bridge lending decisions.
    • AI infrastructure competition redirects capital from traditional CRE, with $60 billion in data center ABS projected for 2026. This secular shift advantages industrial/flex properties near power sources, while pressuring office valuations as tech tenants prioritize computing over workspace.
    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.

    Contact 

    Raj Aidasani
    Managing Director, Research
    646.884.7566
    The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2025 CRE Finance Council. All rights reserved.

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