Marco Giordano, director of real estate inversions at Wellington Management
In 2023, we will analyze the factors that are determining factors for understanding the behavior of current rents in the closing stages: market performance, economic data, brakes on the second German market, central bank movements emerging markets and consumer resistance. In the sequel, we will explain why our relevant considerations apply.
1) Market Rally
During my tenure, the rental markets experienced a significant recovery with further declines in sober bonos yields, where in the final of October there was a darkening and an increase in the profitability of one month of the global rental version of 2008. Among the main drivers of the movements of the types, you can mention the following:
– Communications from the Federal Reserve (Fed) and other central banks to reiterate the belief that inflation has reached more normalized levels and that financial conditions are not tight, with an appropriately tight monetary policy. Mercado interpreted these statements as an indication that no new tips are likely to be produced and that they will be reassessed for 2024. Surprisingly, we expect the Federal Reserve to record these tips in March/April.
– Bone inflation data respond to central bank forecasts. The global market response for these commodities initially fell due to the US core and headline CPI, driven by low expectations. Headline inflation in the Eurozone is at 2.4%, an average point due to lower expectations and weaker July 2021 data.
– Many more data like these ISM (servicios y manufacturas), loss consumer confidencenon-agricultural titles and initial grant petitions stating enfriamiento de la economía mundial, encabezada una vez más por Estados Unidos.
– Ace short covering positions Because of the inverters that set the duration rate, this tendency will accelerate.
Although there are many plotting curves, if they are inverted we observe a flattening, so the answer will not be pronounced on the right side of the square. To keep profitability in perspective, the bond’s duration is estimated at 30 years and over 16 years, and its yield is about 60 basis points, which translates to a yield of 9.7%. We are also seeing a lot of selling of the Estadounidense dollar (USD), which means that the mercados are relying on appreciating the trend of low USD prices in relation to these other divisions sold by the mercados.
2) Economic data
Recent data suggest Economies are weakening, they are slow and their cycles are too bad.. In the United States, core inflation was all but normalized and the ISM manufacturer held below 50 points, demonstrating that the stamina of financial conditions is subject to damage. In Europe, general declines in inflation are driven by energy costs, but also by downturns over the business cycle, particularly in the manufacturing sector. In addition to the European PMI remaining in contract territory, most countries will test the report in November and indicators will show that the cycle can be found during the year with the first signs of a recovery in consumer confidence. and previous industrial pedidos de China. Core inflation is holding comfortably until the end of the facility, while services PMIs have excellent expectations and labor markets are very resilient, with the sample increasing only modestly.
3) Freno a la deuda alemana
In mid-November, the German Constitutional Court declared the transfer of 60,000 million euros from the Covid Fund to the Climate Fund unconstitutional, as if it were a generalized use of instrumental companies to avoid the brake of death. The immediate impact of the sentence is this tax policy will be less expansionary in recent years and reduce expected band-aid emissions in the futureHowever, the Gobierno must reduce its tax compromises or against other forms of finance. Germany maintains the constitutional norm of the second brake, that impide registrar presupuestarios structurees deficits superiores al 0.35% del GDP; We do not hope that the court judgment will be overturned or that the brake will be lifted in this Parliament, but it will limit the tax bill for the time being. This makes it more difficult for Germany to solve structural problems and change the economic model of exports to internal consumption.
4) Central banks of emerging markets
Central banks of emerging markets You can predict events during this cycle when you are in a desirable position. (for other political leaders) from which the gratuity gradually declines, thus supporting the economy without the risk of affecting inflation in the system. From here, various countries in the US are located. In a time of political relaxation, with Latin America and Europe at the center of the country, Brazil and Hungary expect 50 and 75 basis points respectively in November. A notable exception is Turkey, which continues to suffer from a forced march to contain galloping inflation. In this context, emerging divisions exist, in theory we are not alone in these types of orders, but also because the dynamics at the end of the cycle favor only the green ticket, followed by the French and the Japanese yen as a safe haven. Without the embargo, he has a carry trade, while investors exit low-priced divisions to transfer them to more profitable divisions, a strategy that has been confirmed this year and may emerge during this time.
5) Consumer resistance
An important driver of sustained economic growth and services inflation over the past 12 months, The consumer surprised and exceeded most expectations. Since the global financial crisis, we’ve seen continued destabilization of the scales: combined with the protection of our finances in the Covid crisis and the energy of our recent years, consumers have entered this state of the cycle from a position of remarkable strength. .
Rising wages have sustained investment due to the rise in inflation, and while there are fears of a recessionary loss, it is not because it is caused by consumers. The excess of horror accumulated during Covid was agotado in the EE.UU., but not in Europe, where the hoards of horror were more present than before the pandemic. Credit card declines have increased recently, but are on par with pre- and post-Global Financial Crisis periods of over 3%.