🚦 RAG Signal Board — Actionable Market Status
Feb 26, 2026
CPI Inflation YoY
2.4%
Jan 2026 — Beat forecast of 2.5%
🟢 CUT SUPPORTIVE
Core PCE (Fed Target)
2.4%
Above 2% target — moderating
🟡 WATCH — ABOVE TARGET
Unemployment Rate
4.3%
Jan 2026 ↓ from 4.4% — stabilizing
🟢 LABOR STABLE
Nonfarm Payrolls
+130K
Jan 2026 — beat 75K forecast
🟡 SOLID — CUTS LESS URGENT
10-Year Treasury
4.05%
Near 3-month low — neutral signal
🟡 HOLD BIAS PRICED
2-Year Treasury
3.48%
Well below 10Y — curve normalizing
🟢 CURVE UNINVERTED
SOFR 1-Month Term
4.143%
30D Avg SOFR: 4.144%
🟡 ELEVATED VS FED FUNDS
5Y SOFR Swap Rate
3.36%
Below fed funds — market pricing cuts
🟢 CUTS PRICED IN
10Y SOFR Swap Rate
3.645%
Below 10Y treasury — positive swap spread
🟡 MONITOR SPREAD
Mar 18 Cut Probability
5.9%
CME FedWatch — 94.1% hold probability
🟡 HOLD NEAR-CERTAIN
June Cut Probability
<50%
Fallen from higher levels — deteriorating
🟡 JUNE ODDS FADING
Fed Board Vacancy Risk
HIGH
3–4 seats in flux in 18 months
🔴 COMPOSITION RISK
Warsh Confirmation
PENDING
Tillis block threat — timeline uncertain
🔴 POLICY UNCERTAINTY
Cook SCOTUS Ruling
ACTIVE
Could flip board majority if ruled vs. Cook
🔴 BOARD SHIFT RISK
Tariff Policy
VOLATILE
SCOTUS struck IEEPA; new 10% global tariff
🟡 INFLATION WILDCARD
GDP Growth (Q3 2025)
4.3%
Annualized — above 3.2% forecast
🟢 ECONOMY RESILIENT
Signal Interpretation
Overall RAG Status: AMBER (Cautious Hold) — The market environment favors holding rates at 3.50–3.75% near-term with modest easing bias in H2 2026. The dual RED signals on board composition and Cook/Warsh uncertainty represent non-economic tail risks that could rapidly reprice the forward curve. June rate cut probability has fallen below 50%, consistent with sticky PCE and a stronger-than-expected labor market. CPI moderation to 2.4% is the most significant near-term positive catalyst.
📊 Current Rates & Swap Market Data
Feb 26, 2026 Close
| Instrument | Rate / Level | Change | Signal | Swap Relevance |
|---|---|---|---|---|
| Fed Funds Target Range | 3.50–3.75% | UNCH | Hold | Floor for all SOFR-linked swap pricing |
| Effective Fed Funds Rate | 3.890% | UNCH | Stable | Basis for overnight pricing |
| SOFR (Overnight) | ~3.62% | – | On Target | Primary floating index for new swaps |
| 1-Month Term SOFR | 4.143% | +0.004 | Elevated | Loan index for CRE floating rate debt |
| 30-Day Avg SOFR (NY Fed) | 4.144% | –0.020 | Watch | Compounding basis for legacy SOFR loans |
| 2-Year Treasury Yield | 3.48% | +0.01 | Normalizing | Short-end rate expectations; swap curve anchor |
| 5-Year Treasury Yield | 3.72% | +0.24 | Rising | 5Y fixed rate pricing benchmark |
| 10-Year Treasury Yield | 4.05% | –0.126 | Falling | Long-end anchor; yield maintenance reference |
| 30-Year Treasury Yield | 4.72% | +0.002 | Stable | Long-duration swap pricing; pension hedging |
| 5-Year Bank Swap Rate (SOFR) | 3.360% | –0.24 | Cuts Priced | Primary swap execution rate — 5Y |
| 10-Year Bank Swap Rate (SOFR) | 3.645% | –0.131 | Falling | Primary swap execution rate — 10Y |
| USD Index (DXY) | 97.65 | –0.23% | Weakening | Dollar weakness supports easing thesis |
| 2Y–10Y Yield Spread | +57 bps | Steepening | Positive | Normal curve — no inversion recession signal |
| Crude Oil (Brent) | ~$71/bbl | – | Watch | Upside inflation risk if energy spikes |
🗓 FOMC Meeting Calendar — Rate Change Probabilities
CME FedWatch — Feb 25, 2026
Mar 18–19, 2026
HOLD
Target: 3.50–3.75%
Cut 5.9%Hold 94.1%
Near-Certain Hold
May 6–7, 2026
LIKELY HOLD
Powell Chair Transition
Cut ~22%Hold ~78%
Transition Risk
Jun 17–18, 2026
UNCERTAIN
First Warsh meeting (est.)
Cut <50%Hold >50%
Warsh Wildcard
Jul 29–30, 2026
POSSIBLE CUT
Data-dependent
Cut ~50%Hold ~50%
Coin Flip
Sep 16–17, 2026
1ST CUT EXPECTED
Goldman Sachs consensus
Cut ~65%Hold ~35%
Cut Likely
Nov / Dec 2026
2ND CUT (BASE CASE)
Goldman: 2 cuts total 2026
Cut ~55%Hold ~45%
50 bps Yr-End
FedWatch Key Takeaway for Swap Desk
Markets currently price ~2 cuts (50 bps total) in 2026, concentrated in H2. The May meeting carries Warsh confirmation risk — if Warsh is not yet confirmed, Powell presides at his last meeting and may signal a neutral handoff. June is the first Warsh-chaired meeting and the highest policy uncertainty event of the year. JPMorgan and Capital Economics see no 2026 cuts as their base case — making June–December cut pricing a potential source of swap curve richness to fade on hawkish data.
📈 Key Economic Indicators
Latest Available Data
CPI — Headline YoY
2.4%
Jan 2026. Beat 2.5% forecast. Back to May 2025 levels. CUT SUPPORTIVE. Tariff pass-through risk remains.
Core PCE — Fed Preferred
2.4%
Above 2% target. Moderating but sticky. ABOVE TARGET — hold bias. Fed needs sustained decline toward 2.2% to unlock cuts.
Unemployment Rate
4.3%
Jan 2026, ↓ from 4.4%. +130K payrolls vs 75K forecast. LABOR MARKET STABLE. Reduces urgency for defensive cuts.
GDP Growth (Q3 2025)
4.3%
Annualized. Beat 3.2% consensus. Strong consumer spending + exports. SUPPORTS HOLD. No recession signal in near-term data.
Consumer Spending
STALLING
Feb 2026 report showed possible spending slowdown. EMERGING RISK. Watch for confirmation in next retail sales print.
Yield Curve (2Y–10Y)
+57 bps
Curve no longer inverted. POSITIVE NORMALIZATION. Historical inversion preceded recession by 12–18 months — uninversion is not yet all-clear.
Crude Oil (Brent)
$71/bbl
Geopolitical tensions cited. INFLATION UPSIDE RISK. Energy spike could delay Fed easing timeline by 1–2 quarters.
US Dollar Index
97.65
Weakening trend post-SCOTUS tariff ruling. DOLLAR WEAKNESS. Supports risk-on; potential inflation pass-through from import prices.
S&P 500
NEAR ATH
Near all-time highs. AI + earnings driven. P/E10 at 39.8 — ELEVATED VALUATION. Rich equities reduce Fed urgency to ease financial conditions.
Tariff Uncertainty Index
HIGH
SCOTUS struck IEEPA tariffs; Trump announced new 10% global tariff. MAJOR WILDCARD. CPI/PCE pass-through risk in Q2–Q3 2026.
🏛 All 12 Voting FOMC Members
2026 Roster
| Member | Role / Institution | Lean | Jan '26 Vote | Trump Alignment | Term / Notes |
|---|---|---|---|---|---|
Jerome Powell Chair |
Board of Governors | Hold | Adversarial | Chair ends May 2026 → Warsh | |
Philip Jefferson Vice Chair |
Board of Governors | Hold | Neutral | V.Chair to Sep 2027; Gov to 2036 | |
Michelle Bowman V.Chair Supervision |
Board of Governors | Hold | Partial | Trump appt. '18; V.Chair to Jun 2029 | |
Michael Barr |
Board of Governors | Hold | Hostile | Gov term ends Jul 2026 | |
Lisa Cook ⚠️ Contested |
Board of Governors | Hold | Active Conflict | Gov to 2038; removal in SCOTUS | |
Stephen Miran Transitional |
Board of Governors | CUT (dissent) | Fully Aligned | Term expired Jan 2026; holds over → Warsh | |
Christopher Waller |
Board of Governors | CUT (dissent) | Partial | Gov to Jan 2030; may revert hawkish | |
John Williams NY Fed — Permanent |
NY Fed (permanent vote) | Hold | N/A | Always votes; reapptd Mar 2026 | |
Austan Goolsbee Chicago Fed |
2026 Rotating | Hold | N/A | Vocal cut advocate; reapptd to 2031 | |
Alberto Musalem St. Louis Fed |
2026 Rotating | Hold | N/A | Inflation vigilance; reapptd to 2031 | |
Jeffrey Schmid Kansas City Fed |
2026 Rotating | Hold | N/A | Inflation hawk; reapptd to 2031 | |
Susan Collins Boston Fed |
2026 Rotating | Hold | N/A | Hold "likely appropriate"; reapptd to 2031 |
Blue rows = rotating regional Fed presidents. Atlanta Fed president seat is currently VACANT (Bostic retired Mar 1, 2026). Acting: Cheryl Venable.
🔴 Vacancy & Succession Tracker
Live Status
Miran Seat → Kevin Warsh (Chair Nominee)
Term expired Jan 31, 2026. Miran holds over. Warsh Senate confirmation pending. Sen. Tillis threat. Policy SOFR impact: HIGH.
NOW
Awaiting Senate vote
Awaiting Senate vote
Critical
Atlanta Fed President — OPEN
Bostic retired Mar 1, 2026. Acting: Cheryl Venable. Atlanta is 2026 rotating FOMC voter. Board of directors selecting replacement.
Mar 1, 2026
Active vacancy
Active vacancy
Open Now
Cook Seat — SCOTUS Removal Decision
Court-protected for now. SCOTUS ruling on presidential removal power pending. If Trump wins: opens 2038 seat. Board majority shifts 4-3 Trump.
TBD — 2026
Court ruling
Court ruling
Contested
Powell Chair → Warsh (Leadership Transition)
Chair term ends May 15, 2026. First Warsh press conference is the #1 SOFR curve catalyst of 2026. Dot plot changes possible. Forward guidance reform.
May 15, 2026
Confirmed date
Confirmed date
High
Barr Governor Seat Opens
Term expires Jul 13, 2026. Biden appointee unlikely reappointed. Trump's 3rd independent board appointment. Shifts composition further toward accommodation.
Jul 13, 2026
Confirmed date
Confirmed date
High
Jefferson Vice Chair Term Expires
4-year term ends Sep 7, 2027. Governor seat runs to 2036. Trump designates new V.Chair from sitting governors — likely Bowman or Trump appointee.
Sep 7, 2027
18 months
18 months
Watch
Powell Governor Seat (if he stays)
Governor term to Jan 31, 2028. If Powell remains post-chair (uncommon but legal), creates Trump appointment in 2028 — potentially 4th–5th seat.
Jan 31, 2028
Contingent
Contingent
Stable
⚡ 3-Scenario Swap Action Plan
For Zion Swap Client Advisory
Base Case — 45% Probability
Gradual Easing 2026–2027
45%
Sep '26: –25bps → 3.25–3.50% | End '27: 3.00–3.25%
SWAP POSTURE
- 5Y fixed-rate swaps at 3.36% offer attractive locks vs. floating SOFR risk
- Float-to-fixed conversions on CRE loans with 2026 rate resets: execute now before Warsh reprices curve
- 10Y swaps at 3.645% are reasonable for long-duration hedges
- Sell rate caps into current elevated IV; buy floors for downside
- Monitor June FOMC for first Warsh signal — be ready to act within 48 hours
Bull / Dovish Case — 25% Probability
Accelerated Cut Cycle
25%
4+ cuts 2026–2027 | End '26: 2.75–3.00%
SWAP POSTURE
- Triggered by: Cook removed + inflation falls to 2.0% + Warsh cuts aggressively
- Float on existing hedges — don't lock in if cut cycle accelerates
- Buy rate caps selectively on floating-rate CRE loans as cheap insurance
- 5Y swap rate could fall to 2.75–3.0% — wait before executing large fixed-rate locks
- Opportunity: refinance floating into fixed only AFTER first Warsh cut signals this path
Bear / Hawkish Case — 30% Probability
Hold or Hike — Stagflation Risk
30%
No cuts 2026 | Possible hike | End '26: 3.75–4.25%
SWAP POSTURE
- Triggered by: tariff inflation spike + Warsh reverts hawkish + Bowman bloc wins
- Highest priority scenario for floating-rate borrowers — lock in 5Y swap at 3.36% NOW
- Buy rate caps: 4.5–5.0% strike caps on SOFR-linked debt
- Avoid variable-rate structures maturing 2026–2028
- JPMorgan + Capital Economics see this as base case — do not dismiss
- Watch: PCE above 3.0% in Q2 = immediate hike risk trigger
📋 Advisory Summary — Zion Swap
Prepared for Brian Sedlak
Immediate Action Items — Feb 26, 2026
The 5-year SOFR swap rate at 3.36% and 10-year at 3.645% represent historically attractive fixed-rate lock levels for clients with floating rate CRE or commercial loan exposure. The market currently prices ~50 bps of easing in H2 2026 — but three major policy wildcards (Warsh confirmation timeline, Cook SCOTUS ruling, tariff inflation pass-through) make this pricing unreliable. The 30% probability of a hold-or-hike scenario is the key underpriced risk in current swap valuations. Clients with SOFR-indexed floating debt maturing or resetting in 2026–2028 should be evaluating fixed-rate swap conversions aggressively at current levels.
3 Calendar Events to Track This Quarter
1. Kevin Warsh Senate Confirmation Vote (expected Spring 2026): His confirmation hearing statements on dot plot reform and forward guidance are the single highest-impact event for SOFR term structure pricing. Expect 20–30 bps of curve movement within 24 hours. 2. SCOTUS Cook Removal Ruling (timing uncertain, 2026): A ruling affirming Trump's removal power immediately shifts the board from a nominal 4-3 Biden lean to a 4-3 Trump majority and raises the probability of aggressive rate cuts by 10–15 percentage points. SOFR forwards will react instantly.
3. Q2 2026 PCE / CPI Print (April–May): If tariff pass-through shows in the April or May inflation data — core PCE back above 2.8–3.0% — the June cut probability collapses and hike risk becomes primary. This is the data catalyst that would most aggressively move swap spreads against floating-rate borrowers.