Shōkunin Capital & Strategy Weekly – September 28, 2026

The case for a second rate hike keeps building. The Fed’s preferred inflation gauge, released Friday, showed core PCE holding at 3.4 percent over the year and the headline rate at 3.8 percent, neither pointing to the cooling the Fed wants to see. Add a reading on private-sector activity that hit a five-year high last week and Fed officials saying openly that more increases are likely, and the odds of a quarter-point hike at the October meeting have climbed to about 70 percent, up from a coin flip a week ago.

Oil is pushing the same way. Brent crude moved back above $100 this week, with West Texas Intermediate near $95, after the United States rejected Iran’s terms to reopen the Strait of Hormuz and reversed the brief relief of the prior week. Higher energy feeds straight into the inflation the Fed is fighting, and it lands on the long end of the bond market at the same time.

The wrinkle this week is Washington. Government funding expires at midnight on Tuesday, and if Congress does not act, a shutdown begins Wednesday. The immediate cost for markets is data. The September jobs report due Friday would be delayed, along with other government releases, leaving the Fed to weigh October’s decision with less information than usual. A Fed already inclined to raise, deciding partly blind, is not a combination that argues for patience.

The bond market is not waiting. The ten-year Treasury touched 5.23 percent on Friday, its highest since 2007, and pushed higher again Monday as oil rose. Prime is at 7 percent, a second hike is now more likely than not, and the long rates that price real estate sit at a nineteen-year high with energy driving them further. The move has not changed, only grown more urgent: lock what floats, term out what you can, and stop underwriting to relief the Fed keeps signaling is not coming.

The ten-year at 5.23 percent is the number that matters, a level not seen since 2007, and what is driving it has shifted. Inflation and the Fed still count, but strategists now point to supply as the bigger force: heavy government borrowing and a wave of corporate issuance tied to the AI build are flooding the market with bonds faster than buyers want them. A government shutdown would stack fiscal uncertainty on top. Long rates price commercial real estate, and they are now at their most expensive in nearly two decades with no near-term relief in sight. Underwrite to a cost of capital that is higher than a month ago and likely higher after October.

For California owners, the pressure is unchanged and compounding. Every floating balance now sits at Prime 7 percent, Los Angeles multifamily financed through the agencies prices off a ten-year above 5, and a second hike in October would move both again. The deals still closing are the ones underwritten to this reality, and the owners in the best position locked and termed out before the September hike. Where a project’s return can be created in what it is entitled to build rather than borrowed from a rate, that lever is worth more with each month the long end climbs.

Hospitality takes the hit from two sides this week. Oil back above $100 reaches the value traveler first, through the cost of getting anywhere, and a government shutdown would close national parks and curb federal and business travel just as the fall season sets up. The rate hike, meanwhile, raises the cost of every hotel loan and looming maturity. The offset remains a consumer still spending on experiences, but the margin for error is thinning. Owners financing now should treat the fuel line, the rate line, and Washington as three variables pointing the same direction.

Two things to act on. First, a second rate hike in October is now more likely than not, which would take Prime to 7.25 percent. If you carry a floating balance or have a deal in progress, this is the week to lock, convert, or draw before it reprices again. Second, watch the shutdown. The SBA is a federal agency, and in a shutdown it generally stops approving new 7(a) and 504 loans until the government reopens. If you have an SBA loan in the pipeline, a shutdown this week could stall your approval, so know where yours stands and plan around a possible delay.

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Rate levels reflect the September 25, 2026 close; economic, energy, and policy figures as of Monday, September 28. Provided for general information and not investment, legal, or tax advice.

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