1. INTEREST RATE OUTLOOK Despite the Federal Reserve’s decision to hold rates constant at their June meeting, current market forecasts project an 81.8% chance that the FOMC will move forward with a 25-basis point hike in July, according to the Chicago Mercantile Exchange’s Fed Watch Tool. In June, officials placed their year-plus hiking cycle on …
1. BANK STRESS TESTS According to the Federal Reserve, all 31 “systemically important financial institutions” (SIFIs) passed their annual stress tests. These tests evaluate the ability of large US banks to absorb hypothetical losses while maintaining more than their minimum required capital levels. The stress tests evaluated banks under a scenario where the unemployment rate …
1. INTEREST RATES The FOMC voted to leave rates unchanged at its June policy meeting, which aligned with market expectations. On Wednesday, markets braced for the convergence of May’s Consumer Price Index data, which arrived just a few hours before the Federal Reserve’s June policy decision, where policymakers voted to hold interest rates in place. …
1. CRE LOAN MODIFICATIONS RISE AMID HIGH-RATE ENVIRONMENT According to a new report by Trepp, CMBS loan modifications rose dramatically in 2023 as a significant swell of loans are set to mature in the coming quarters. Modification volumes peaked mid-year 2023, climbing to $3.9 billion during the third quarter, almost nine times higher than levels …
1. LARGE FUNDS INCREASE CRE FOOTPRINT A recent analysis by Reuters details how large funds are increasing their CRE market share as traditional lenders such as banks pull back. Stricter capital rules for banks and recent regional bank failures in the US have led to a retreat from traditional lenders in the real estate space, …
1. CPI INFLATION US annual inflation continues to decelerate through April. As reported by the BLS, the Consumer Price Index grew 4.9% year-over-year as of the most recent reading. The current pace of growth indicates a slowdown compared to the 5% year-over-year growth witnessed in March, signaling a gradual easing of inflationary pressures. Despite overall …
1. FIRST-QUARTER GDP The US economy expanded by a 1.6% annualized rate during the first quarter of 2023, according to the latest data from the US Bureau of Economic Analysis. First quarter GDP fell short of most estimates. Economists surveyed by Bloomberg, on average, forecasted a 2.5% pace of growth during the quarter. Q1 2024 …
1. CPI INFLATION The Consumer Price Index (CPI) rose 0.1% month-over-month and 5.0% year-over-year through March, according to the Bureau of Labor Statistics’ latest release. It was the slowest monthly climb for prices since December. Energy prices are down 6.4% year-over-year, with declines accelerating in March, falling 3.5% in March compared to a more tepid …
1. HOMEBUYERS ADJUSTING TO HIGHER INTEREST RATES A new survey by Fannie Mae suggests that home buyers are gradually adjusting to higher mortgage rates despite increasingly negative sentiments about the housing market. Fannie Mae’s Home Purchase Sentiment Index dropped in March for the first time since November, primarily driven by mortgage rates that remain near …
1. INTEREST RATE IMPACT ON BANK SECURITIES AND CAPITAL After recent distress in the banking sector, there is a risk that many of the small and mid-sized banks that hold the bulk of US commercial real estate loans may see a credit crunch, dampening liquidity in the sector. According to Goldman Sachs, roughly 80% of …