Market Indicators were recently covered in BisNow.
Indicators that the economy is headed for a recession are piling up. One indicator, that has been consistently positive since the last recession in 2007, inverted on Friday. The spread between the 10-year and three-month treasury yields went negative. The inversion of this curve has been the harbinger of a recession in the US on a reliable basis since World War II.
The yield on the long-term Treasury bonds continued its year-long decline, reflecting a dearth of optimism in the markets long-term health against the Federal Reserve’s short-term monetary policy. Reports caution that correlation does not necessarily equal causation, as pre-recession investment sentiments will send investors flocking toward safer bonds could cause the inversion, rather than the other way around.
After over a year of interest rate hikes in response to economic strength, the Fed indicated that it does not plan to raise rates any further this year. For some time now, the commercial real estate investment market has been white hot, especially for multi-family and especially from institutional-size investors with the scale to choose between entire sectors of the global economy and influence those sectors. Even as multi-family and industrial are considered safe-holds in the impending downturn, the competition for those assets is to change the fundamentals of those deals. The eventual severity of the recession could determine at what point the price tags cease to be worth it.
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