Investors are bracing for a flood of more than $1 trillion of Treasury bills in the wake of the debt-ceiling fight, potentially sparking a new bout of volatility in financial markets by overwhelming buyers, jolting markets and raising short-term borrowing costs.
S&P 500 Performance
Compared with the S&P 500 traditional index’s 11% gain, the equally weighted version has added 1.1%. That is the largest-ever outperformance by the S&P 500 on a year-to-date basis based on data starting in 1990.
Fed Target
Derivatives markets show investors now expect the Fed’s target rate to sit at 5% at year-end, up from just above 4% last month.
Consumer Confidence
Despite steady job gains, Americans are growing more pessimistic about economic growth, which slowed in the first quarter. Consumer confidence fell in May for the second straight month.
Bank Loans
In the first quarter, banks’ real-estate loans, excluding residential single- to four-family homes, yielded 5.4%. That represented a rise of more than 1.7 percentage points over a year earlier. Those residential home-loan yields, by contrast, rose just over 0.6 point from a year earlier, to 3.96%.
Loan to Value
The ratio of money banks lent out compared to property value dropped to 51% LTV this spring, a 30-year low in commercial mortgages.
Home Prices
On a year-over-year basis, the home price index rose 0.7% in March, down from a 2.1% annual rate the prior month. The annual increase was the smallest since May 2012.
Office REITs
Office REIT stock prices posted a 48% decline since the start of 2020. Over that same period, the S&P 500 index is up 37%.
Extended Stay
Extended stay hotels remain an enduring bright spot for a hospitality industry that was rocked by the pandemic. These properties had an occupancy rate of 74.7% last year, significantly higher than overall hotel occupancy in the U.S., which reached 62.6% in 2022.
Share Buybacks
Companies in the Russell 3000 have unveiled plans to buy back more than $600 billion in shares this year, in line with last year’s record pace. In all, they announced $1.27 trillion of share repurchases and completed $1.05 trillion in buybacks in 2022, both all-time highs.