411. Play the Ball? Bonds Threw a Curve: New York CRE Shakeups & What Super Regional Bank Earnings Mean for CRE

**Haley Keen** (0:02)
Welcome to The TreppWire Podcast, the show where commercial real estate meets data and insights. This is our Week in Review for the week ending July 31st, 2026 I'm Haley Keen with Trepp, a data modeling and analytics firm for the CMBS, commercial real estate and CLO markets. I'm with Lonnie Hendry, Chief Product Officer and Stephen Bushbaum, Head of Applied Research and Analytics. The Federal Reserve stood still this week, but the bond market definitely did not. The Fed held rates steady, although three officials voted for an increase, revealing a meaningful split over how aggressively the central bank should respond to persistent inflation. Chairman Kevin Warsh reiterated that the Fed remains committed to its 2% target, but investors appeared less convinced that another hike is imminent. Shorter term Treasury yields fell following the press conference, while the 10-year moved higher and the 30-year climbed to levels not seen since 2007
That left markets with a complicated message. Less confidence in a near-term Fed hike, but growing concern about inflation and longer-term borrowing costs. Overseas, AI anxiety helped trigger an extraordinary sell-off in South Korea, where both major stock indexes hit circuit breakers for a second consecutive session. The episode provided a warning about market concentration, leverage, and just how much global growth optimism has become tied to the AI investment cycle. Also on today's show, we'll take a walk through several major New York property stories, from additional stop work orders at office to resi conversions, to a major change at Macy's Herald Square flagship, and the latest chapter for the Flatiron Building. We'll also dig through super regional bank earnings to assess what they mean for CRE availability, and cover even more data center news involving power constraints, tenant credit risk, and another enormous development announcement. A lot to cover this week. So Stephen, let's start from the top. What did you make of the Fed decision, and particularly the bond market's reaction?

**Stephen Bushbaum** (2:04)
Well, like you said, Haley, you put it beautifully. The Fed's announcement was not a surprise, but the press conference and the bond market reaction definitely indicated there was some surprise in play. And this wasn't the fun kind of surprise you get when you see like a Tiffany blue box. This was the kind of surprise you get when you park under, say, a group of pigeons' favorite tree, right? This was not, I repeat, I do not think the Fed wanted to see this type of market reaction. Front end of the yield curve dipped a little bit lower, saying, we don't believe you that you're actually going to hike rates and you're committed to the inflation target. And again, that longer end said, we're really concerned about inflation and, by the way, if this keeps going on, yields could go higher from here. So it was really interesting. One of the comments or the quotes that got repeated a couple of times throughout this press conference was, well, we want markets to learn to play the ball and not the referee. So I'm sure we're going to hear that probably ad nauseum over the coming weeks. So yeah, that 10-year Treasury market response, the two- and the five-year yield specifically, fell roughly 8-10 basis points from their earlier levels intraday on Wednesday. So that suggests investors are less convicted that the Fed will actually follow through with that near-term height despite Mauritius' tough language on inflation. So this was the really confusing part of the press conference. And if any of you out there watched it and importantly, listened to the tone and the questions coming out of the journalists there, I mean, this was a lot to unpack. And market commentary coming out of that press conference was equally confused and harsh and just, I mean, there was a lot to digest here. So the long end of the Treasury curve delivered the opposite message, a 10-year yield and importantly, the 30-year rose sharply. I mean, that's a major move, Lottie, right? Like to see that 30-year press up to levels that we haven't seen since 2007, we're in a completely different environment, very different here, very different inflationary pressures. But that is a warning shot in my book, right? I mean, that the capex spend and the inflationary pressures AI is passing throughout the economy are difficult to digest, along with oil prices from this war. And if I step back from this, plug my ears and just say, la, la, la, la, la, let me think about this for a minute, right? I agree with the Fed's decision. Holding steady was the right response. How it was messaged, perhaps, and after the fact, maybe could have been better formed. The Fed really wasn't articulate about why they decided to hold steady.