Volatility Has Returned. Execution Matters More.

As we move further into 2026, capital markets volatility continues to be driven as much by global dynamics as by domestic policy.

Recent movement in U.S. Treasury yields reflects renewed inflation pressure tied to geopolitical instability in the Middle East. Following a pre-airstrike low of approximately 3.51 percent on the 5-year Treasury and 3.98 percent on the 10-year, rates moved meaningfully higher in the weeks that followed. Elevated energy prices and ongoing conflict have reinforced a higher-for-longer rate environment, with the 10-year Treasury now back in the low 4 percent range.Recent movement in U.S. Treasury yields reflects renewed inflation pressure tied to geopolitical instability in the Middle East. Since the initial airstrikes on Iran, the 5-year Treasury has increased approximately 47 basis points, and the 10-year Treasury has risen roughly 40 basis points. Elevated energy prices and ongoing conflict have pushed the 10-year Treasury back into the low 4 percent range, reinforcing a higher-for-longer rate environment.

For borrowers, this backdrop is having a direct impact on both loan pricing and transaction dynamics. In a market where buyers and sellers were already working to bridge pricing expectations, the recent increase in rates has added another layer of complexity.

Despite this volatility, lenders remain active and focused on deploying capital.

Life company lenders are entering the year with capital to place and an increased willingness to compete on structure. In response to current conditions, many are operating with greater flexibility than we have seen in prior cycles.

This is showing up in the form of shorter-term executions, bridge-to-permanent structures, and more tailored solutions for assets in transition. At the same time, life companies continue to provide the consistency they are known for, including non-recourse financing and early rate certainty.

What This Means For You

• The range of available executions has widened, but so has the gap between average and best-in-market outcomes. Structure and lender selection are having a more pronounced impact on proceeds and pricing

• Some borrowers have taken a more cautious approach in recent weeks as fixed rates have moved higher, while others are continuing to transact, recognizing that lender liquidity remains strong

• Volatility in the Treasury market is making rate lock timing more critical than in more stable environments, as relatively small movements can materially impact execution

• For borrowers with near-term financing needs, the current environment remains workable, particularly given the continued activity from life company lenders. That said, expectations for materially lower rates in the near term should be weighed against ongoing macro uncertainty