Apr 15, 2017 - 0 Comments - Economy, Financing -

Yield Curve Quarterly Snapshot – 2017 Q1

U.S. Treasury Yield Curve Nominal and Real Q1 2017 vs. Q4 2016

U.S. Treasury Yield Curve Nominal and Real Q1 2017 vs. Q4 2016

At the end of the 1st quarter of 2017, U.S. Treasury yields, on a nominal basis, edged higher at the short end, up about 20-30 basis points for maturities under 2 years. On a real basis, rates were largely unchanged.

The interest rate environment has the ability to affect commercial property economics in a number of different ways (see thisthis, and this).  Borrowing costs are, of course, affected directly, as higher interest rates increase the cost of borrowing and thus  negatively affecting demand.  Cap rates tend move over time with interest rates, but not in lockstep, with considered analyses generally concluding that capitalization rates on average move in the same direction as 10-year rates, but only about a third as much, and again not in lockstep.  Interest rates also affect the economy, which in turn affects vacancy and rental rates.  In summary, the interest rate environment is very important to commercial property investment.

View more yield curve quarterly snapshots.