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HFF Research Update for November 17, 2015: Choppy Waters

Wednesday, November 18, 2015

Weekly insights on current research in the commercial real estate industry from HFF Managing Director of Research Jimmy Hinton. View Daily Rates on the HFF website or access the HFF Daily Rates App in iTunes.

Coalition responses to terrorist networks have been swift, broad and decisive. U.S. war planes have destroyed a network of vehicles ISIS uses to transport oil, a primary source of income for the organization. French air forces have destroyed training grounds and arms depots. Additionally, Vladimir Putin has announced the crash of Metrojet flight 9268 was indeed the result of a bomb. He also has instructed his Ministry of Defense to work with France's Navy Command as "allies" in Syria. Pressure is mounting.

Analysis of Market Insights and Economic Performance

Domestically, Walmart exceeded profit estimates in 3Q (Star Wars?) and manufacturing activity reportedly expanded last month more than forecast. Mario Draghi is banging the proverbial drums for quantitative easing throughout the Euro area, pushing the USD higher.

Goldman Sach's $758 million CMBS pool saw its largest AAA tranche price at SWAPS+125 bps according to the filings CMBS lenders release. Credit Suisse's issuance has not yet been finalized, in as much as I don't see SEC filings reporting final tranche pricing. Citi will be bringing a $1.1+ billion pool to market with a planned settle date of December 8. Earlier this morning, we heard that "breakeven" CMBS spreads have widened to approximately 245 bps.

Meanwhile, USTs and SWAPs are moving higher this morning, with each 2-4 basis points across the maturity curve. The negative spread between the 10-year UST and the 10-year SWAP has moved down to -13 bps, the lowest measure in more than five years.

We're awash in corporate and mortgage bond issuance. The domestic economy is proving resilient to global headline risk, which has been met with decisive responses. The FOMC appears ready to hike it Fed Funds Rate next month.

Don’t get lost in the weeds. There is a lot happening out there.

About Jimmy Hinton

HFF Jimmy HintonMr. Hinton serves as Managing Director of HFF and is responsible for the firm’s research efforts. Mr. Hinton works with the executive management team to assist in investor relations and to inform both HFF staff and firm clients with in-depth analysis of economic, property and capital market trends. He is also responsible for providing extensive market reports, client presentations and deal-specific analysis for debt placement and investment sales assignments. Mr. Hinton’s responsibilities include substantial interaction with pension funds, life insurance companies, regional and CMBS lenders, REITs, foreign investors and private equity funds.

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