{"id":1004348399,"date":"2019-08-27T04:44:17","date_gmt":"2019-08-27T12:44:17","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004348399"},"modified":"2019-08-27T07:18:20","modified_gmt":"2019-08-27T15:18:20","slug":"yield-curve-inversion-might-portend-but-doesnt-predict-recession","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/","title":{"rendered":"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession"},"content":{"rendered":"
\"Ken<\/a>

Ken McCarthy, Principal Economist & Americas Head of Applied Research, Cushman & Wakefield. Image courtesy of Cushman & Wakefield<\/em><\/p><\/div>\n

Will there be another recession? Of course\u2014eventually. How soon? No one knows. There\u2019s a lot we can\u2019t necessarily understand or predict about the economy and the current business cycle. But in a new report<\/a>, Cushman & Wakefield brings clarity to something that has lots of people nervous, even though (or perhaps because) they don\u2019t really understand it: The yield curve and its recent run of inversion.<\/p>\n

The yield curve, as measured by the spread between the 3-month Treasury bill and the 10-year Treasury note, inverted briefly back in March and April, the report notes. But what has many a bit spooked is its persistent inversion since May<\/a>, which is why Cushman & Wakefield released this update.<\/p>\n

\n

READ ALSO<\/strong>: Federal Reserve Cuts Rates for 1st Time Since Recession<\/a><\/p>\n

\n

The report emphasizes one crucial distinction: Yes, yield curve inversions have since at least the 1960s been a reliable, though not infallible, predictor<\/em> of recessions. But no, inversions do not cause<\/em> recessions.<\/p>\n

Further, we are not in a recession now, nor is there likely to be one soon, nor is there any reason to think that the next recession will be anywhere near as bad as the last one. In addition, the lead time between an inversion and a recession varies substantially. Even when an inversion lasts at least a month, the time to recession can be as little as five months or as long as 18 months. On top of that, the report notes, \u201cCRE fundamentals in most markets are in good shape<\/em>.\u201d<\/p>\n

Under the \u201cIs this time different?<\/em>\u201d heading, Cushman & Wakefield points out factors that could be artificially depressing 10-year Treasury yields, such as Fed actions to keep those rates low and a flight to quality by jittery investors.<\/p>\n

When, not if<\/h2>\n

Whatever one\u2019s judgment about the correlation between an inverted yield curve and recession, the former does present opportunities, according to Cushman & Wakefield. Here are a half-dozen:<\/p>\n

    \n
  • Because long-term rates are down while short-term rates have been stable, owners can refinance and switch out of shorter-term debt and into longer-term debt at lower rates.<\/li>\n
  • \u201cPlan for income, but not for capital appreciation<\/em>,\u201d advises the report\u2019s author, Ken McCarthy, Americas head of applied research. \u201cAt this point, any further capital gains from CRE would be a bonus<\/em>.\u201d There\u2019s an opportunity now to move up the capital stack.<\/li>\n
  • A brief, modest recession could produce pricing corrections and thus buying opportunities, particularly with record levels of capital targeting CRE.<\/li>\n
  • It\u2019s an even better time than usual to diversify, as to both product type and geography. The multifamily and industrial sectors are benefiting from long-term structural shifts, and larger markets with more diversified economies can often better withstand downturns.<\/li>\n
  • It\u2019s also an opportune time to refocus on the basics, such as strong demographics and sectors supported by robust supply-and-demand dynamics (think life sciences and health care).<\/li>\n
  • \u201cTenants who are in a sound financial position can take advantage of any downturn to improve the quality of their space and\/or lower their rent<\/em>,\u201d the report suggested.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

    An update from Cushman & Wakefield discusses the correlation between an inverted yield curve and its implications for commercial real estate. <\/p>\n","protected":false},"author":882,"featured_media":1004269022,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21783,23891,21742],"tags":[32799,36694],"class_list":["post-1004348399","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-investment","category-national","category-latest","tag-cushman-wakefield","tag-ken-mccarthy"],"acf":[],"yoast_head":"\nYield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession\" \/>\n<meta property=\"og:description\" content=\"An update from Cushman & Wakefield discusses the correlation between an inverted yield curve and its implications for commercial real estate.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-08-27T12:44:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-08-27T15:18:20+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Ken-McCarthy.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/\",\"name\":\"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession - 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He started writing about CRE in 1988 for a group of Chicago-based publications and in 1989 became the editor of Midwest Real Estate News. After moving on from there in 1991, Baltic continued writing occasionally about real estate, for publications like the Chicago Sun-Times, National Real Estate Investor, Urban Land, Shopping Center World and Architect\u2019s Newspaper. He earned a master\u2019s in journalism from Northwestern University\u2019s Medill School of Journalism and has a bachelor\u2019s from North Park University.\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/author\/scott-baltic\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession - Commercial Property Executive","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/","og_locale":"en_US","og_type":"article","og_title":"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession","og_description":"An update from Cushman & Wakefield discusses the correlation between an inverted yield curve and its implications for commercial real estate.","og_url":"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/","og_site_name":"Commercial Property Executive","article_publisher":"https:\/\/www.facebook.com\/CPExecutive","article_published_time":"2019-08-27T12:44:17+00:00","article_modified_time":"2019-08-27T15:18:20+00:00","og_image":[{"width":800,"height":620,"url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Ken-McCarthy.jpg","type":"image\/jpeg"}],"author":"Scott Baltic","twitter_card":"summary_large_image","twitter_creator":"@cpexecutive","twitter_site":"@cpexecutive","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/","url":"https:\/\/www.commercialsearch.com\/news\/yield-curve-inversion-might-portend-but-doesnt-predict-recession\/","name":"Yield Curve Inversion Might Portend, But Doesn\u2019t Predict, Recession - 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