SOFR is sitting 11 bps above the Fed's floor. Short-term funding is easing without policy easing.
SOFR borrowers: costs are falling. Prime borrowers: no change.
Benchmark choice is now a real decision, not a formality.
What Actually Moved
- SOFR -5 bps to 3.61%. Now 11 bps from the Fed's floor. Primary signal.
- SOFR-Prime gap now 314 bps. Structuring impact for borrowers with benchmark optionality.
- Treasuries down: 2-year -3 bps to 3.81%, 10-year -4 bps to 4.31%. Supportive.
- BBB credit spreads -5 bps to 1.04%. Risk appetite holding.
- Prime 6.75% and Fed Funds 3.50%-3.75%: unchanged. Background.
Key Takeaways
- SOFR at 3.61% is effectively at the floor of the Fed's corridor (11 bps above 3.50%), a sign liquidity is not constrained. Borrowers on SOFR-indexed facilities are getting real cost relief without any Fed action.
- The 314 bps gap between SOFR (3.61%) and Prime (6.75%) changes how deals get structured. This gap did not exist a year ago.
- Front-end Treasury yields are falling (2-year -3 bps to 3.81%, 10-year -4 bps to 4.31% ) while the long end holds, consistent with the market pricing sustained policy patience, not imminent action.
- March CPI's split, headline hot at 3.3% YoY but core moderate at 0.20% MoM, gives the Fed cover to hold. Rate cuts stay off the table until core accelerates or employment weakens.
- BBB spreads at 1.04% mean lenders are competing for deals, not retreating from risk. Credit appetite is intact.
- The real question at the April 28-29 FOMC is not whether the Fed holds, but whether the statement language shifts after the hot headline CPI.
Current Benchmark Rates
| Benchmark | Current (Apr 10) | Prior Week (Apr 3) | WoW Change |
|---|---|---|---|
| Bank Prime Loan Rate | 6.75% | 6.75% | 0 bps |
| SOFR | 3.61% | 3.66% | -5 bps |
| Fed Funds Target Range | 3.50%-3.75% | 3.50%-3.75% | unchanged |
| 2-Year Treasury | 3.81% | 3.84% | -3 bps |
| 10-Year Treasury | 4.31% | 4.35% | -4 bps |
| 30-Year Treasury | 4.91% | 4.91% | 0 bps |
| BBB Credit Spread (OAS) | 1.04% | 1.09% | -5 bps |
The Fed Funds Upper Bound chart traces the full easing cycle from the 5.50% peak through the current 3.75% plateau: 175 basis points of cumulative cuts, then a pause that has held since January 2026.
What Moved
SOFR fell from 3.65% on April 6 to 3.57% by April 9. It bounced back to 3.61% on April 10.
The bounce doesn't change the signal. Short-term funding is easing independent of Fed action: ample reserve balances and light overnight repo demand are doing the work. As discussed in how Prime Rate is determined, the overnight rate can drift within the Fed's corridor without triggering a benchmark change.
Treasury yields cooperated with the overnight narrative. The 2-year fell 3 bps to 3.81% and the 10-year dropped 4 bps to 4.31%, while the 30-year held at 4.91%. BBB credit spreads narrowed 5 bps to 1.04%, confirming risk appetite has not deteriorated despite the mixed inflation picture.
Where We Are in the Cycle
The Fed has stopped cutting, but markets are still easing. The Fed took the upper bound from 5.50% to 3.75% between September 2024 and January 2026. Two consecutive holds (March and the expected April 28-29 ) have turned the easing cycle into a plateau. March CPI complicates the path: headline +0.87% MoM pushed YoY to 3.3%, but core rose just 0.20%, which gives the FOMC room to hold. Unemployment at 4.3% adds no urgency. The current environment favors SOFR-indexed borrowers whose costs are declining even as the benchmark range stays flat.
Borrower Implications
SBA 7(a) Variable-Rate Loans
SBA 7(a) rates remain pegged to Prime at 6.75%, unchanged since January. Maximum rate on loans above $350,000: Prime + 3.00% = 9.75%. Smaller loans carry wider spreads: up to Prime + 6.50% (13.25%) for loans under $50,000. A $500,000 SBA 7(a) loan at 9.75% over 10 years = $6,539/month. Plan around the current rate for at least the next quarter.
SOFR-Indexed Facilities
This is where rates are actually moving. The 5 bps net weekly decline means floating-rate lines of credit, adjustable-rate term loans, and SOFR-indexed CRE facilities are repricing lower without any Fed action. On a $1 million line priced at SOFR + 250 bps, that's about $500 a year: modest in dollars, but the signal is worth more than the savings. For the first time this cycle, SOFR-indexed and Prime-indexed facilities are pricing 314 bps apart. That's a real structuring choice, not a formality.
Fixed-Rate and Long-Term Borrowers
SBA 504 debenture rates, tied to the Treasury curve, benefit from this week's mild yield decline. The 10-year at 4.31% supports the 5.50%-6.25% range on 20-year CDC financing. CRE borrowers benefit from both the yield decline and tightening BBB spreads, which feed into commercial mortgage pricing. Firms locking rates today are 175 bps below the environment 18 months ago.
What to Watch
The April 28-29 FOMC is the dominant catalyst, two weeks out. A third hold is expected, but watch the statement language on inflation after the hot headline CPI. Weekly SOFR readings will show whether the drift toward the lower bound continues. The business loan interest rates data hub tracks how benchmarks translate into borrower costs over time. Updated snapshot after the FOMC decision.