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The U.S. Dollar Index reached the highest level since the end of 2002 and could be a negative sign for future economic activity.

The U.S. Dollar Index (DXY) got to the highest closing level since December 2002.  The U.S. Dollar has been increasing against all of the major currencies within the DXY index as well as some of the largest emerging market currencies.  Historically, a large increase in the U.S. Dollar exchange rate signals a tightening in lending...
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Single family housing activity slowed in March as mortgage rates increased. This could lead to a decline in home prices and a reduction in the growth of consumer prices.

Mortgage rates have been rising throughout 2022, and the pace has accelerated since March, ending the week of April 21st above 5% for the first time since 2011. Source: FRED. This increase in borrowing costs is starting to have an impact on current and future expected single-family activity.  Some of the impact is driven by...
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A Look at where Tenants are Migrating in Several Key Markets Across the Country

The Washington, D.C. market has seen over 2 million square feet of tenant migration out of the core CBD and East End submarkets over the past several years.  Most of the migration is driven by the Federal Government who has taken advantage of the aggressive terms offered by Landlords with lower land basis in outer...
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Nominal retail sales growth is slowing while real retail sales have turned negative as inflation has increased. Consumer spending will likely continue to weaken against difficult comparisons, and inflation will likely remain elevated but could slow in coming months.

Throughout the course of 2022, we have been reiterating our view that economic growth and inflation would likely slow on a rate of change basis compared to 2021.  One of the reasons we mentioned is that the comparison set would be more challenging in 2022, especially starting in March.  The release of the March retail...
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Treasury rates have been moving higher as the Federal Reserve members have become more vocal about the need for an aggressive policy stance. Market signals that are less influenced by policy guidance are not suggesting interest rates are going to remain elevated.

Our outlook for 2022 has been that the rate of change for economic growth and inflation would slow compared to 2021.  In prior historical periods when this has occurred, long-term interest rates have declined.  This has been especially true when the Federal Reserve has been increasing short-term interest rates.  Thus far in 2022, long-term interest...
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The Recent Rise in Interest Rates Provides Fixed Income Investors an Opportunity for a Brighter Future

With the first quarter over, many bond investors have been left scratching their heads and wondering – what just happened?  For a class of investors who are not accustomed to losing money, they were quickly reminded how bond math works – as interest rates rise, the value of bonds fall.  To some investors, a glance...
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Real durable goods orders are slowing alongside real incomes, which is causing inventory levels to rise in-line with a traditional business cycle slowdown.

Consumer spending, especially durable goods, spiked from the second quarter of 2020 to the second quarter of 2021.  This was aided by a combination of increased incomes via fiscal policy and a lack of an ability to engage in services activities because of COVID.  While incomes have started to come down (especially on a real...
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Mortgage rates have been increasing in 2022 and are already starting to have a negative impact on rate sensitive areas like housing.

Treasury rates have been increasing in 2022 and continued at an accelerated pace in the month of March.  This has carried over into other borrowing markets, including residential mortgage rates.  The increase in mortgage rates has already impacted housing related data through the month of February and will likely have a large impact on March...
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We believe leasing activity will increase as businesses begin to emerge from the pandemic and look toward future office space needs.

With COVID variants such as Delta and Omicron seemingly slowing down and back to office plans being put in effect, companies have begun to shift their focus on office space needs into 2022 and beyond. The U.S. office market registered its first quarter of positive net absorption in Q4 2021 since the onset of the...
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The Federal Open Market Committee has started the cycle of increasing the target range for the Federal Funds Rate, but yields are already suggesting that interest rates may have peaked.

The Federal Open Market Committee (FOMC) voted to start increasing the target range on the Federal Funds Rate last week, moving the range from 0-0.25% to 0.25-0.50%.  They also guided toward the possibility of six more increases by the end of 2022.  These changes in policy stance have led to increased conversations about the future...
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