What we’re reading (4/18)
“Commercial Real Estate Is Bruised But Not Broken” (Financial Times). “Commercial real estate is facing a trifecta of challenges. Rising interest rates have reduced the net present value of properties and have pushed up mortgage costs. According to the RCA CPPI National All-Property Index, US commercial property prices have fallen 9 per cent over the past seven consecutive months. This drop, when annualised, is the biggest since 2010. According to Trepp, $270bn in commercial mortgages held by banks are set to mature this year, the highest on record. Higher interest rates mean rolling that debt over will be costly. Consequently, sales volumes have dropped to levels not seen in a decade (excluding the depths of the pandemic). And finally rents in CRE have been soft as a shift to working from home has sapped demand for office space.”
“Banks’ Bond Losses Caused the Crisis. Now the Crisis Is Reversing the Losses.” (Wall Street Journal). “The ripple effects of the banking crisis are reversing one of the problems that sparked it. Rising rates over the past year saddled banks with losses on their massive portfolios of bonds. Those losses helped sink Silicon Valley Bank last month. But since that failure sparked turmoil across the banking sector, falling bond yields have narrowed those losses.”
“Public Pessimism On The Economy Hits A New High, CNBC Survey Shows” (CNBC). “Amid persistent inflation, higher interest rates and recession worries, Americans have never been more negative about the economy, according to the latest CNBC All-America Economic Survey. A record 69% of the public holds negative views about the economy both now and in the future, the highest percentage in the survey’s 17-year history.”
“Big Question With Dollar Under Fire From Rival Countries And Currencies: What Happens To Markets If The Greenback Loses Its Dominance?” (MarketWatch). “Is “King Dollar” in danger of losing its crown? Probably not yet, but the rapid unwinding of last year’s torrid rally in the U.S. dollar, combined with efforts in Beijing and beyond to ease dependence on the buck, have helped to reinvigorate speculation that the greenback’s dominance over international trade and finance may be moving toward its twilight.”
“De-Dollarization Is Happening At A ‘Stunning’ Pace, Jen Says” (Bloomberg). “The greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions, Jen and his Eurizon SLJ Capital Ltd. colleague Joana Freire wrote in a note. Adjusting for exchange rate movements, the dollar has lost about 11% of its market share since 2016 and double that amount since 2008, they said.”
