Investors are being selective with high yield credit risk as liquidity becomes harder to find.
Consumer and real estate markets look to be in better health than corporations.
Looking beyond the shape of the yield curve, what happens during Fed hiking cycles?
The yield curve has inverted out to 10 years for the first time this cycle. What can this tell us?
The consumer and commercial real estate markets continue to exhibit the strong fundamentals while government and corporations look to be the weaker.
Equity markets are sending signals that suggest all is well and the economy is bouncing back, but the bond market and other defensive assets seem to disagree.
Global economic data continued to decline in the early parts of 2019, while the U.S. remains the strongest region. Despite weak economic data and negative earnings revisions, risk markets have rebounded strongly as sentiment has improved and concerns about further monetary tightening have dissipated.
Since the financial crisis, the BBB-rated cohort has increased significantly. We acknowledge the recent credit quality concerns in the investment grade credit market, but we do not believe that all BBBs should be painted with the same brush.
As the government shutdown nears its fourth week, what can investors in commercial real estate expect from the second longest shutdown in U.S. history?
Equity and credit markets have been declining in the fourth quarter as investors have become more concerned about the outlook for the economy and earnings in 2019. A change in monetary policy and financial conditions are new wrinkles from prior risk asset pullbacks experienced since 2009.
As of October, and into November, the equity markets have experienced a wide spread sell-off due to several factors. In this post, we take a look at corporate fundamentals to gain insight into what is taking place in the market and why.
The quest to stay up-to-date on the real estate landscape and make connections in the marketplace never stops. A recent Urban Land Institute (ULI) conference helped shed some light on how transit-oriented development projects are having a transformative impact and what secondary cities are doing to attract businesses and residents.
The Treasury yield curve is close to inverting when looking at the 2-year to 10-year spread. Is this signaling a recession within 24 months? Is this the appropriate measure? Or is the Funds Rate or T-Bills to 10-year spread a better indicator of curve “flatness”? A brief look back at past curve inversions can provide some insight.
In the first half of 2018, the real estate sector had modest returns, trailing the performance of the S&P 500. Fundamentals remain strong along with liquidity, and we see no imminent sign of a downturn for the remainder of 2018. Despite our optimism, there are a few potential headwinds that we are watching including a decrease in transaction volume, higher interest rates, higher labor costs impacting capital budgets, and continued asset selling by pubic REITs.
We are approaching the second half of 2018 positioned for higher interest rates and flat-to-tighter spreads. Our focus continues to be on income generation and maintaining a yield advantage relative to the benchmark.
Boyd Watterson believes that advisors and consultants should keep their clients invested through the cycle to increase the likelihood that long-term investment objectives are achieved. We design our moderate beta strategies with this understanding in mind.
Our belief is that investment returns are significantly driven by macro factors such as inflation, economic growth, credit cycles, the level and direction of interest rates, equity multiples, and cap rates. We, at times, need to make minor adjustments to our strategies to ensure we are making the most of what the market offers.
Long term interest rates have been moving higher and the Fed is guiding to more rates hikes. Is this going to lead to higher cap rates and lower valuations, or will the large amount of uninvested capital keep a lid on cap rates?
The economic growth story remains for 2018, with inflation increasing at a measured pace. Additionally, corporate earnings growth rates are high, warranting an overweight to corporate credit in our view.
Longer-term leases tend to benefit both GSA tenants and property owners. A typical GSA tenancy is more than two decades long whereas an average lease is 10 years, with 5-year extension options being typical. Structuring a longer-term lease that more closely matches GSA tenancy can result in cost savings through lower rents. Property owners, in turn, may experience higher property values due to more stable occupancy, potential reduced costs, and potential better financing terms.