The Fed is not done raising rates yet...
- Market sentiment in 2 nd Quarter has been decisively risk-off due to a combination of record inflation, a hawkish Fed, rising interest rates, and a volatile stock market. The macroeconomic backdrop has become increasingly complex for investors to navigate—the economic data is mixed, and volatility rules the day, as per Cushman and Wakefield.
- Many economists have revised second quarter GDP estimates as tighter monetary policy and other macro headwinds slow growth. Most of the public and investors now expect the economy to fall into recession before the end of 2024.
- The Commercial Real Estate Debt market has regressed further in Q2: lender credit standards are higher, spreads are wider, and liquidity is tighter. Loan volume has slowed as borrowers try to recalibrate expectations for acquisitions and refinancings in a rapidly moving market
- As per Bloomberg US, Lloyd Blankfein, the Goldman Sachs Group Inc. former senior chairman, said people should “dial back a bit” on their negativity following a series of corporate warnings on the economy. Dial back a bit the negativity on the economic outlook. If I’m managing a big company of course I’m prepping for the worst. But the economy is starting from a strong place, with more jobs than takers, and is adjusting to higher rates. Riskier times, but may yet land softly.
With an inverted Yield Curve and short rates rising relative to longer rates, the cost of defeasance continues to decline. There continues to be an appetite for deals getting done across all property types. This includes Multifamily, Self-Storage, Mobile Home Communities, Industrial Properties, Etc..