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We think the Fed is likely to raise interest rates three more times by the middle of next year. By 2020, however, we suspect that Fed officials will reverse course and cut interest rates in response to a slowdown in the economy. Other major central banks …
27th September 2018
The latest data add to the evidence that the slowdown in the euro-zone economy this year has not just been down to a series of “one-offs”. We expect growth to slow further over the next couple of years. Meanwhile, a speech by a member of the ECB’s …
21st September 2018
Our updated yield model points to prime euro-zone office yields rising by only around 5bps by the end of 2020. This is notably less than our forecast, which points to a rise of 20bps in the same period. However, country-specific factors in Italy, in …
20th September 2018
Despite the recent softening of the economic data, on Thursday ECB President Mario Draghi maintained a positive tone on the outlook for GDP growth and inflation. And the Q2 labour cost data, published on Friday, will have given policymakers further cause …
14th September 2018
With property yields in emerging Europe sitting above their pre-crisis lows and those in central Europe looking relatively well-placed on our valuation measure, we think that yields in the region can continue to edge down next year, by as much as 15bps at …
12th September 2018
After providing a big boost to GDP growth last year, net exports were a drag on growth in the first half of 2018. This does not look like a temporary response to heightened trade tensions. Instead, it largely reflects three developments: a slowdown after …
11th September 2018
The latest official data on activity in the euro-zone have been fairly weak, but the timelier survey indicators paint a more positive picture. Meanwhile, Italian bond yields have fallen recently following comments from the Government that it would stick …
7th September 2018
The pace of economic growth in the euro-zone economy appears to have peaked in this cycle. At the same time, commercial property markets look to be plateauing as investment volumes track sideways and prime yields appear close to their likely floor. While …
Large-cap equities have generally continued to make headway in the US since the end of July, despite the fact that they have fallen in much of the rest of the developed world. Historically, equities in the US and other advanced economies have rarely moved …
4th September 2018
Euro-zone data published this week showed a picture of fairly strong growth but continued subdued inflationary pressure. In the coming years, we expect GDP growth to slow, but underlying inflation to creep up. Meanwhile, we doubt that the US-Mexico trade …
31st August 2018
Property yields ticked down only slightly again in Q2, but there were more meaningful shifts in the yields of other assets. Safe-haven markets generally saw an improvement in property valuations. However, higher bond and dividend yields in riskier markets …
Fed officials look increasingly confident in their plans to raise interest rates twice more this year while ECB officials are on course to end their asset purchases by December. Next year, though, we expect the Fed to raise rates only two more times …
30th August 2018
Greece’s exit from its bailout on Monday was widely hailed by European policymakers as a sign of success, but its problems are far from over. Meanwhile, comments from President Trump emphasised that, despite the supposed tariff ceasefire between the US …
24th August 2018
We suspect that, due to technical reasons, the ECB will increase its purchases of Italian government bonds in October. This might help to prevent yields from shooting up if Italy’s Government submits a very expansionary Budget to the European Commission …
21st August 2018
The sell-off in Italian bonds continued this week, and although we think that Italian yields have further to rise, we suspect that contagion will remain limited. Meanwhile, data released this week for the euro-zone showed that the economy did better in …
17th August 2018
There is a widely-held view that the prices of many financial assets are bound to come crashing down sooner or later, because their valuations have risen far above the long-run averages to which they must inevitably revert. We think that this is bunkum, …
15th August 2018
The second quarter of the year saw further signs that the euro-zone property market upswing is close to an end. With a 5% annual fall in investment, activity is now starting to track sideways on a four-quarter rolling basis. Very few office and retail …
Economic growth recovered somewhat in Western Europe, but slowed further in emerging Europe in Q2. Occupier activity has still been strong, but rates of rental growth slowed across the board. Similarly, investment volumes dropped off and yield falls were …
The stronger-than-expected expansions in Germany and the Netherlands in Q2 provide some hope that the euro-zone economy may have grown more strongly in Q2 than initially estimated. This should encourage the ECB that it is right to wind down its asset …
14th August 2018
While worries about the exposure of euro-zone lenders to Turkey weighed on the euro and European banking stocks on Friday, the economic spillovers to the region should be fairly modest. Meanwhile, comments from Italy’s Deputy Prime Minister Luigi di Maio …
10th August 2018
Property investment fell back sharply in Q2, keeping our prediction of an annual slowdown in activity firmly on track. Even so, investment will be cooling from levels which are high by historical standards and the breakdown still points to pockets of …
The accord between Presidents Trump and Juncker to aim for free US/EU trade in non-auto industrial goods poses a minor threat to some EU sectors, including chemicals and plastics. But existing tariffs are low and the differences between them are even …
9th August 2018
Q2’s slowdown in GDP growth to just 0.3% q/q dealt a blow to hopes that the softness of growth in the first quarter would be a one-off. While no breakdown is available yet, timely data from France and Spain suggest that the weakness reflected a drag from …
7th August 2018
While we still assume that the UK and the EU will reach some sort of agreement over Brexit before the deadline next spring, there is clearly a significant possibility of no deal. In this scenario, we would expect sterling to fall a lot further, but UK …
June’s industrial production and trade figures suggest that the previously booming German economy is already feeling the effects of trade tensions. But with the domestic economy in good shape and given the recent ceasefire in the tariff war, we expect …
Disappointing euro-zone Q2 GDP data published this week have made our forecast of a 2.2% rise in GDP this year look optimistic. But July’s business surveys were more upbeat and suggest that a marked slowdown is unlikely to materialise. Meanwhile, the rise …
3rd August 2018
The easing of trade tensions between the US and EU this week reduces the risk that the US will soon increase tariffs on EU cars, but it still leaves us a long way from any action to reduce trade barriers. Meanwhile, ECB President Draghi’s comments at …
27th July 2018
Strong occupier demand and limited completions have boosted prime Frankfurt office rents. But with demand likely to ease and completions on the rise, this pick-up in rental growth is unlikely to last long. … Pick-up in Frankfurt office rents won’t be …
25th July 2018
July’s very small fall in the Ifo Business Climate Indicator (BCI) left it still pointing to strong German GDP growth, which will encourage the ECB to maintain a fairly optimistic tone when it meets tomorrow. … German Ifo Survey …
The ECB’s Q2 Bank Lending Survey adds to the evidence that the euro-zone economy will continue to perform well. And there is little sign that the uncertainty about the Italian Government’s policies has led to a tightening of credit conditions in the …
24th July 2018
July’s fall in the euro-zone PMI comes as something of a disappointment but the index is still consistent with a decent pace of GDP growth at the start of Q3. Accordingly, the ECB is likely to push ahead with its plans to normalise policy very gradually. …
European office markets have started the year in buoyant mood, with take-up reaching a post-crisis high, vacancy rates falling and rents climbing by around 2.5%. Nevertheless, as we outlined at the start of the year, we still expect a slowing in momentum …
23rd July 2018
Recent euro-zone data releases have generally been encouraging, supporting our view that GDP growth picked up from 0.4% in Q1 to 0.5% in Q2. Meanwhile, the EU-Japan trade deal, signed this week, is unlikely to have a significant macroeconomic effect. Next …
20th July 2018
Economic growth in Switzerland and across the Nordics looks set to remain pretty strong over the coming years. But inflationary pressures vary significantly between countries. We think that central banks in Sweden and Norway will start to raise interest …
The recent spike in Italian government bond yields is likely to be sustained for the foreseeable future, increasing the risk of a sharper re-pricing for Italian commercial property than we are forecasting. … Higher Italian bond yields increase risks for …
The EU’s and, particularly, Germany’s trade practices have been criticised heavily by President Trump, prompting him in early July to label the trade bloc “as bad as China”. However, from a global perspective, neither their bilateral surpluses with the US …
Having announced last month that asset purchases will end in December, the ECB is unlikely to make any policy changes at its July meeting. We doubt that President Draghi will offer more explicit forward guidance than to reiterate that interest rates will …
19th July 2018
Ireland’s GDP contracted in Q1, but this tells us next to nothing about the underlying state of the economy. Other indicators are much more encouraging and, despite some big risks to the outlook, we think that the economy will continue to perform well. … …
Most European economies have experienced a slowdown since last year, but growth is still strong by historic standards and prospects are fairly bright. Admittedly, trade protection poses a serious threat, particularly to the most open economies like …
Growing occupier demand for industrial units close to the German and Austrian borders will offset the slower economic growth that we are expecting in the next few years in the CEE markets. This will prompt growth of the industrial stock in those areas and …
18th July 2018
In an otherwise quiet week, the main economic news was the publication of the minutes of June’s ECB meeting. They showed that members of the Governing Council “widely agreed” to update their forward guidance, which now states that interest rates will be …
13th July 2018
May’s strong increase in euro-zone industrial production offered welcome reassurance that the slowdown in GDP growth in Q1 did not mark the start of a downward trend. … Euro-zone Industrial Production …
12th July 2018
A positive economic outlook for Belgium and a shortage of available Grade A stock bode well for office rents in Brussels. Foreign investors, in particular, are increasing exposure to the market as it also offers above-average income returns. We therefore …
11th July 2018
The further decline in German ZEW investor sentiment seems to reflect concerns about the impact of possible protectionist measures. But May’s industrial production data for France and Italy support the message from the earlier German release that Q2 was a …
10th July 2018
Immigration has remained very high up the political agenda this week, and while EU leaders reached a compromise on Monday, this is not a closed issue and tensions may well flare up again. Meanwhile, the news on the German economy has been much better this …
6th July 2018
Hard data relating to euro-zone activity in Q2 have been a little disappointing so far, denting hopes that GDP growth would rebound strongly after Q1’s 0.4% quarterly expansion. Industrial production declined by 0.9% m/m in April, while retail sales fell …
5th July 2018
Record investment activity in Denmark underscores the positive outlook for returns in Copenhagen, especially in the industrial sector, which we expect to be the best-performing market in Western Europe. … Healthy outlook for returns supports case for …
4th July 2018
In our opinion, this week’s media coverage of the June EC and Ifo surveys was too downbeat. Both indicators are still consistent with annual GDP growth of over 2%. Other data told a familiar story of subdued underlying price pressures. Meanwhile, at this …
29th June 2018
As rising US Treasury yields have squeezed US property’s yield gap over the risk-free rate, investment volumes have dropped back and core office yields are rising. While Europe is lagging the US, there are good reasons to believe that European property …
The big news this week was that Greece is finally emerging from a period of eight years under bailout programmes. But our judgement remains that the risks of a future Greek default and/or euro-zone exit are significant. Meanwhile, comments at the ECB’s …
22nd June 2018
