Postponement Of Bond-Purchasing Program Shows Lack Of Confidence In Economy Going Into 4Q13

Transwestern Releases September Edition of "the BRIEFING"

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Oct 16, 2013, 02:11 ET

HOUSTON, Oct. 16, 2013 /PRNewswire/ -- The Federal Reserve's surprise decision to delay, for at least a month, its previously announced plan to begin moderating the $85 billion a month third quarter bond-purchasing program signals a lack of confidence in the economy going into the fourth quarter, according to the September edition of "the BRIEFING" report compiled by Transwestern.

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Transwestern publishes a monthly report called "the BRIEFING" that analyzes the national economy, capital markets and commercial real estate. The September issue discusses a lack of confidence in the economy, slow overall job growth and retail sales, and yield-hungry investors turning toward higher risk markets for commercial real estate investments. (PRNewsFoto/Transwestern) (PRNewsFoto/TRANSWESTERN)

Overall job growth and retail sales continue to be anemic, while corporate earnings growth has also moderated into the mid-single digit range. While there is little evidence that the economy has reached a stall speed, the overall economy climate will continue to restrain hiring, business investment and retail sales in the near term.

In capital markets, investors continue to be hungry for returns after several years with benchmark rates near zero. In the short run, 10-year Treasury rates have fallen below 2.65 percent, providing some relief from an earlier spike to almost 3 percent. This has led to record bond sales by investment-grade companies and has also resulted in a flight from emerging market bond and stock markets.

Meanwhile, commercial real estate is still a safe haven for institutional and non-institutional investors. Of late, there has been a rotation out of core investments into increasing tolerance for risk in a search for higher yield. Additionally, the commercial mortgage backed securities (CMBS) market has rallied with nearly $5 billion sold in the first two weeks of August after a plunge in CMBS pricing slowed issuance in June and July to a standstill.

More information can be found in Transwestern's September issue of "the BRIEFING," a monthly publication analyzing the national economy, capital markets and commercial real estate. The full report can be read here.

"The BRIEFING" is an aggregation by Tom McNearney, Transwestern chief investment officer, of other articles and reports. McNearney leads Transwestern's capital market efforts for development and investment nationwide. McNearney also serves on the firm's investment committee and board of directors, and he directs the execution and expansion of the firm's principal investment activities across the country.

ABOUT TRANSWESTERN
Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, development, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. Transwestern facilitates better decision-making for clients by combining penetrating local market intelligence and macro-market research through its affiliate, Delta Associates. Transwestern has 33 U.S. offices and assists clients through more than 181 offices in 40 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate. For more information, please visit www.transwestern.net and follow us on Twitter: @Transwestern.

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SOURCE Transwestern