The Ten-year posted massive increases after what Thirty Capital said was a "crazy" week, marked by massive volatility. Increasing inflation, continued tension over Ukraine, and anticipation ahead of interest rate hikes are all impacting the markets and making it harder to predict too far into the future.

Inflation has reached a 40-year high, with the Consumer Price Index posting a 7.5 per cent annual gain.

Panic and speculation impacting markets

The Two-year treasury actually jumped 21 basis points, mostly due to speculation that the Fed may actually hike by 50 basis points in March. Some are predicting even a 100-basis point increase by mid-summer.

Says Thirty Capital Analyst Bryan Kern: "We're not really sure how it's going to pan out, but there was a lot of panic, a lot of speculation.

"Then of course there was some news surrounding the potential invasion of Ukraine by Russia on Friday, so we saw rates kind of pull back a little bit," he continues. "With all this volatility net net from last Monday to today, we're up about 6.5 to seven basis points."

Thirty Capital Analyst Jeff Lee says that on the financial side Thirty Capital is seeing a 30 plus percent increase in requests to reprice or forecast deals. "Everyone's forecast is definitely fluid and changing."

Meanwhile, Thirty Capital Analyst Jay Saunders points out that last week Two-year SOFR swaps moved up 24 basis points alone on Thursday. "You just don't see movement like that . . .  so the short-end of the curve is very volatile."

Cap market struggling

Things were so crazy that at one point on Friday the cap market was completely frozen. "You simply could not buy a cap . . . there was not a dealer on the street," says Jay.

For commercial real estate investors trying to understand what the cap lockup and freeze means, Jay explains that over the next six months or so "as we go through what I suspect will be this change in the Fed's policy, we'll start to see actual rate increases to the extent that you can get some flexibility with lenders as to when you purchase these caps.

"Anything that involves some kind of optionality, it's going to be really, really hard to put a price on it," he explains, adding that he can't recall seeing a cap lock up and freeze ever before.

"It's a very strange market," Jay comments. "It may work itself out quickly when we start seeing some calm come back into the market, but right now it is very volatile."

Looking at termination? Be aware of intraday volatility

Bryan warns commercial real estate investors to be wary of the volatility that can run through the market in an eight-hour period.

In this week's episode he explains how Thirty Capital had to terminate a couple of swaps, and with one, a bank paid a premium to get out of the contract.

Be opportunistic through this volatility and inflation

Thirty Capital Analyst Jason Kelley says that inflation will continue for a while, but should peak this year. He notes that inflation is highest in the energy sector, but doesn't think that gas prices will increase again.

Says Jason: "You're going to see big swings and it's a good time to be opportunistic and actually work with someone that's got the screens to see where the market's moving."