HOUSTON, June 10, 2014 /PRNewswire/ -- Despite a very positive employment report in April, there is growing concern that the recovery is in a stall, according to the June edition of "the BRIEFING" report compiled by Transwestern. Investors have responded by fleeing to the relative safety of bonds, causing interest rates to fall − exactly opposite of what many pundits had predicted for this year. A 3 percent growth rate now appears to be unduly optimistic.
Barring an exogenous shock, the underlying strength of the U.S. economy should power through these issues and generate continued economic growth. However, this will likely continue at the tepid pace of 2 percent, the hallmark of this five-year recovery.
Persistently sluggish economies in Europe have confounded central bankers and surprised investors. Europe remains near stall speed despite years of monetary stimulus. European Union economic activity grew at a weak 0.8 percent in first-quarter 2014, despite Germany's growth of 3.3 percent. The prospect of additional stimulus, as well as the flight to safety of bonds, has driven rates even lower.
The capital markets environment continues to be characterized by extreme thirst for income in a yield-starved world. A rally in the Treasury market brought the 10-year yield to 2.5 percent, down from 3.03 percent at the end of December. This was despite the Federal Reserve's decision to continue to cut its bond-buying program by another $10 billion, bringing the stimulus to $45 billion a month.
Both debt and equity markets remain highly liquid and competitive, as commercial real estate continues to offer attractive yield to income-oriented investors and an opportunistic upside for those looking for higher return/risk investments.
More information can be found in Transwestern's June issue of "the BRIEFING," a monthly publication analyzing the national economy, capital markets and commercial real estate. Download the full report here: http://twurls.com/briefing0614
"The BRIEFING" is an aggregation by Tom McNearney, Transwestern's 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.
Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, 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. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has
34 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 transwestern.com and follow us on Twitter: @Transwestern.