Liberty CMBS Interest Rates and Commentary For Week of Dec. 27, 2013

December 27, 2013

Jobless Claims, Fed Tapering Launches 10-Year to 3% 

After jobless claims fell more than analysts forecast, the 10-year Treasury note hit 3 percent, its highest level since September. Bloomberg reported that the yield rose to 3.01 percent on Sept. 6, “unseen since July 2011.”

And that might not be the end, as some are predicting.

“The pace of the U.S. economic recovery means there’s room for the 10-year yield to rise further, perhaps towards 3.25 percent in 2014,” said Soeren Moerch, head of fixed-income trading at Danske Bank A/S in Copenhagen in a Bloomberg News report  “I don’t think it will go much higher from there. We expect the Fed to keep official interest rates low for another 18 to 24 months.”

In addition to jobless claims, the latest indicator on the economic good news train is new home sales, which rose to a 464k annual rate in November, higher than consensus. Prices  rose as supply dropped and inventory fell as well even though existing-home sales didn’t fare as well, according to the National Association of Realtors.

The Treasury yield curve continued to rise as well in reaction to the Fed’s announcement last week that it will begin cutting back bond buying by $10 billion per month to $75 billion.

Where there’s smoke there’s fire and CMBS bond sales heated up in 2013. Bloomberg News reported that “banks have arranged about $72.3 billion of securities… this year, more than double the amount sold in all of 2012.”

But some aren’t as hot on tapering as others and see it as a bumpy road not a smooth slide.

The Washington Post reported that Yu-Dee Chang, chief trader at Ace Investment Strategists said the Fed could “bungle the withdrawal of its stimulus program next year.”

“I don’t think the tapering is going to be as smooth as some people are thinking,” Chang is quoted as saying. “It’s going to bring some uncertainty in the market.”

CMBS Rate sheet for week of 12/27/2013

Non-Recourse loans for Limited Service Hotels, Office, Industrial, Retail, Multifamily. (As low as $3 Million)

3.85% I 5 YEAR FIXED
5.45% I 10 YEAR FIXED

For more about our loan programs, click here.

Email acohen@libertysbf.com for more information.