425. The Payoff Problem: Rising Yields, $4.7B in Hard Maturities, & AI’s $4.2T Revenue Gap

Haley Keene (0:05)

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 October 2nd, 2026

I'm Haley Keene with Trepp, a data modeling and analytics firm for the CNBS, commercial real estate and CLO markets.

I'm with Lonnie Hendry, chief product officer, and Stephen Bushbaum, head of applied research and analytics.

This week, we've had a busy round of economic data and the signals are mixed. ADP reported a rebound in private sector hiring with 90,000 jobs added in September, while the Joltz report showed fewer job openings in August. Consumer confidence fell sharply, reflecting growing concerns about jobs and living costs, but actual consumer spending remained strong. Meanwhile, the Fed's preferred inflation measure came in softer than expected, alongside downward revisions to earlier readings.

In today's show, we'll discuss what this means for the Fed's next move, especially after John Williams suggested another rate increase could wait, and with long-term treasury yields still elevated. We'll also have a Digging Through the Data segment, where we'll look at the $4.7 billion of CNBS loans reaching hard maturity in October. Almost all of that balance is current on payments, but the cash flow metrics and borrowers' payoff plans reveal some substantial refinancing risks. Stephen, how are you putting this week's numbers together?

Stephen Bushbaum (1:32)

Well, given that we're going into the most wonderful spending season of the year, let's start off with consumer confidence. Distinction I make here is between how households feel and what they're actually doing. Now, confidence deteriorated and it deteriorated in a big way. But August spending, the back-to-school spending, still rose six-tenths after inflation, and September's ADP report showed hiring picked up.

Then even the numbers that came out for job losses on Thursday and the challenger job cuts, all of that still points to employers holding on to jobs. So there's clearly still resiliency in the economy, and even as households grow more concerned about their finances and job prospects, nothing is breaking and nothing appears to come close to breaking. The inflation report gives the Fed some breathing, gives them a little bit of headroom here, but the revisions matter. Headline PCE is now at 3.4 percent, core is at three, and with July revised down to those same annual rates. So part of the improvement relative to what we previously knew comes from revised measurements and inflation remains above the Fed's target. So we're at this really funny area. And this is where I feel like the next Fed meeting is going to reveal a little bit more about Warsh's hand, right? And where he stands on the hawkish-dubbish scale. So I'm really interested to hear the continued string of Fed comments and what happens at this next meeting. So for Siri, a slower pace of Fed hikes would be helpful, but borrowers still have to refinance at today's costs. And those are significantly elevated from where they were just a month ago. Rates are up about half a point, relatively across the curve. So that's the connection to October's hard maturities. Making the monthly payment tells us something about the loan's current status and the property's income, the amount of debt, and whether the borrower can execute a sale or refinancing tells us much more about what happens when the principal comes due. So it's that idea of the three clocks, the property, the credit, and the capital clocks, and when they synchronize at maturity.

Now, I just want to touch on treasury yields for just one moment. Because we joked around last week on the podcast about 525 being the resistance point and according to what we had last week, the second resistance point was going to be right at about 529

So, I went and re-ran this pivot point resistance analysis for this week, still anchoring back to September 21st. And what's really interesting here is that on Wednesday, the 10-year treasury closed at 5.291%, essentially matching that first resistance level calculated from the prior week pivot point analysis.

And that puts us directly in that 529, 530 resistance zone. And we've come back off of that a little bit. So, I refresh that analysis for our month-end market pulse. And what's going to be interesting to watch is if we have a sustained move above 5.3%. That's what I'm looking for. Because now our next two resistance points are 5.39% and about 5.5%, 5.53%.

So, where we go from here, we'll tell a lot about the technical and fundamental pressures in the treasury market. So, a lot going on this week. It all flows through to refinancing, financing costs and stress or not stress in the economy. But Lonnie, how are you feeling about treasure yields and the hurdle and how high they might have to go?