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Yield curves are inverted in the U.S. and other major countries.

Historically, curve inversions have been a useful indicator to suggest some unfavorable economic environment likely lies ahead. Today, there are inversions across several curves in the U.S., U.K., Germany, Canada, and elsewhere. The U.S. Treasury 2s10s yield curve has been inverted since July 6, 2022, moving from -4 basis points to -77 basis points as...
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State and Local Building Performance Standards

In the United States, buildings account for almost 40% of energy consumption and over 30% of greenhouse gas emissions and can be a higher source of emissions in cities.1 State and local governments are implementing building performance standards to help achieve their energy and decarbonization goals for the building sector. Benchmarking is used to measure...
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Third quarter earnings highlighted the weakening of corporate profit margins and estimates for future quarters suggest the trend could continue.

The third quarter 2022 earnings season is almost complete and has provided some useful insight into how the corporate sector of the economy is performing and how it is expected to perform in the coming quarters. According to Factset, as of November 11th, the blended y/y earnings growth for S&P 500 companies was 2.2% (with...
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Global business sentiment data did not improve in October.

When reviewing the tables below, it is important to remember that a number below 50 indicates a contractionary environment. S&P Global Composite PMI data for most countries declined on a m/m basis and several made new lows for the year. That trend is unfolding in both manufacturing and services. Source: Macrobond. The Institute of Supply...
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The growth of hybrid and remote work environments remain a threat to office occupancy.

The term “Return to The Office” has commanded time in the news cycle over the past two and a half years. As companies struggle through return strategies, executives are realizing there is no one-size-fits all solution to the future of the office. Despite the uncertainty, investors and tenants are similar in their attraction to quality....
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Not-so-positive GDP in 3Q22 and a difficult hand-off to 4Q22.

GDP grew at a 2.6% annual rate in 3Q22, led by a 2.77 percentage point contribution from net exports. Personal consumption expenditures added 0.97, which was a rate of change slowdown from the prior quarter and versus 3Q21. Government spending added 0.42 points, its first positive contribution since 1Q21. Source: Macrobond.  Exports jumped 14.4% q/q...
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Market-based indicators are suggesting higher front-end rates through year-end.

A focus for market participants is the outlook for short-term interest rates and FOMC guidance into 2023. There are market-based indicators that we monitor that can be helpful in tracking how the market is discounting probable outcomes related to short-term lending rates. Overnight index swaps have increased over the last six months and recently moved...
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Throwing Darts at a Moving Target: Forecasting the Fed Funds Terminal Rate

In recent weeks, there has been a divergence of opinion on one of the most important macroeconomic topics monitored throughout the finance industry. No, not the disappearance of Alaskan Snow Crabs, but the impossible task of forecasting the federal funds terminal rate. With futures markets currently pricing in an approximate peak rate of 5% in...
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Shelter prices continued higher in August, keeping the Consumer Price Index elevated.

The Consumer Price Index accelerated 0.39% m/m with Shelter leading the way, contributing 0.24% to the total m/m increase. On a y/y basis, the headline CPI decelerated modestly from last month’s pace to 8.22% from 8.25%. Shelter contributed 2.18% of the total y/y increase, its tenth consecutive month making a new all-time high contribution. Source:...
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Ratings Rollercoaster

The tides are beginning to turn for investors as the ratio of upgrades to downgrades begins to fall. In the first quarter of 2022 the ratio was 6.4x, showing the effects of COVID debt repayment and revenues returning to more normalized levels. However, following the second quarter of this year, the ratio has dropped to...
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