Interest Rate Volatility and Trade War: Implications for CRE Investors

Escalating Trade War Sparks Interest Rate Volatility

•Following 4 aggressive rate hikes in 2018, the Fed cut interest rates on July 31 – their first cut since 2008

•Escalating trade tensions with China sparked uncertainty, induced flight to safety of bonds

•10-Year treasury plummeted to lowest level since late 2016 and remains highly volatile

Economic Outlook Steady… Trade War Poses Risk

•Underlying economy remains sound – job growth, consumption, and demographics are all positive

•Escalating U.S./China trade war slowing global economies; Several countries dropping rates

Stability of CRE Investment Increasingly Attractive

•Uncertainty and financial market volatility reiterate stability of commercial real estate

•Lower borrowing costs may be temporary; if trade war ends, rates could rise quickly