Capital Markets Overview & Forecast December 2013
Agenda
• Executive Summary • Economy & Jobs • U.S. Sales/Pricing Trends • Debt/Equity Markets • Outlook
2
Executive Summary • 2013 will go down as another subpar recovery year for economic growth; but there is an upward bias in the outlook for 2014 & 2015. • Job creation has been steady. At the current rate of hiring, the U.S. will return to peak employment by June of 2014. • Lawmakers were beaten down in the polls by the recent government shutdown – creating a strong incentive for budget compromises by the January 15th deadline. • The Fed’s monetary policy is likely to remain loose for a long time, but the data is beginning to support the first tapering in early 2014. • Interest rates will resume a controlled climb upwards, but tame inflationary pressures will keep rates well below the historical average
3
Executive Summary • Unlevered annual returns are exceeding 10% in nearly two-thirds of the country in 2013 • Demand for CRE loans is at all time high and lending standards will continue to loosen. • With the jobs recovery spreading to numerous geographies, sales and pricing are accelerating in secondary/tertiary markets • Investors will see less upside with core assets, but healthier debt markets will keep pricing in this segment of the market elevated
• The need for yield in combination with stronger economic growth will increasingly push capital into suburban and value-add opportunities
4
Economy & Jobs
5
Fed’s Economic Outlook Real GDP & Forecast 4
3.3 3.2
3
2.5
3.0
3.4 3.3 3.3
2.2 1.9
2 1
0 -1
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
-2
-3 -4
Actual
June 2013 FOMC Forecast
September 2013 FOMC Forecast
CT Forecast
The Fed revised its GDP estimate down from 2.5% to 2.2% in 2013 and revised 2014 down from 3.3% to 3.0%.
CT’s Forecast is below the Fed’s outlook for 2013 but slightly more optimistic for 2014 & 2015.
Source: Investment Strategy Group, Goldman Sachs
6
Gov’t Shutdown Hits Q4 Growth 1995-96 Shutdown
Recent Shutdown
4.5
25
4
20
3.5
15
3
10
2.5
5
2
0
Real GDP, Year-ago % chg.
Net Absorption, Office Space msf
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
25 20 15 10 5
0
Real GDP, Year-ago % chg.
Net Absorption, Office Space msf
The 1995-96 shutdown (21 days), shaved 50 bps off of 1995Q4 GDP and U.S. net absorption of office space was reduced by 7 msf in that same quarter; it bounced back in the following period.
The recent shutdown lasted 16 days. S&P estimates it shaved 60 bps off 2013Q4 GDP. CT estimates the recent shutdown will reduce U.S. net absorption of office space by 5 msf, but demand will bounce back in 2014Q1.
Source: Cassidy Turley Research
7
Financial Markets Shrug It Off CBOE Volatility Index SP500 VIX 90
14.5
Lehman collapse
80 14
70 2011 debt ceiling debate
60
13.5
50 Recent gov’t shutdown
40
13
30 20
CBOE VIX
12.5
10
The CBOE VIX stayed relatively calm during the recent gov’t shutdown, staying below 14 compared to the last debt ceiling debate when it jumped to over 40.
The long-run average of the VIX is 20; it was 12.7 on November 21 st – a near recovery low.
14-Nov
12-Nov
10-Nov
8-Nov
6-Nov
4-Nov
2-Nov
31-Oct
29-Oct
27-Oct
25-Oct
23-Oct
21-Oct
19-Oct
17-Oct
15-Oct
2013
2012
2011
2010
2009
2008
13-Oct
12
0
Source: SIX Financial Information, Moody’s
8
10-Year Treasury Update Historical
Past 3 Months 3.1
7
3
6.03
6
2.9
4.79
5
2.98
2.79
2.8 4
2.71
2.7 2.79
3 2
2.6 2.5
1.80
1
2.53
2.4
The 10-Year Treasury rose 60 bps to 2.98% following Chairman Bernankee’s “tapering” comment in June, but it has fallen over 40 bps since the government shutdown and debt ceiling debate.
The 10-Year remains well below its historical average of 5.2% since 1990, but is expected to trend upwards gradually over the next few years.
11/21/13
11/14/13
11/7/13
10/31/13
10/24/13
10/17/13
10/10/13
10/3/13
9/26/13
9/19/13
9/12/13
11/21/13
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
9/5/13
2.3
0
Source: Federal Reserve
9
CMBS Spreads Tightening New-Issue Spread Over Swaps 250 200
New Issue Fixed Rate (Conduit)
150
100
Avg. Life
11/20
Week Earlier
52-wk Avg.
5.0
S+72
S+71
55
10.0
S+99
S+98
93
AA
10.0
S+159
S+158
166
A
10.0
S+227
S+222
218
BBB
10.0
S+335
S+329
333
AAA
50
10-Yr AAA 11/8/13
9/20/13
8/2/13
6/14/13
4/26/13
3/8/13
1/18/13
11/30/12
10/12/12
8/24/12
7/6/12
5/18/12
3/30/12
2/10/12
12/23/11
11/4/11
9/16/11
0

Spread (bp)
Spreads continue to tighten. The 10-Year AAA swap spread fell to 99 bps on November 8th, down 28 bps from midJuly.
Source: Commercial Mortgage Alert
10
Monetary Stimulus 3500 3000 2500
QE3
2000 QE2
1500 1000 500
QE1
0 Jan 1970
May 1974
Sep 1978
Jan 1983
May 1987
Sep 1991
Jan 1996
May 2000
Sep 2004
Jan 2009
May 2013
Monetary Base, U.S. $Bil.
“The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the jobless rate breaches the Fed’s 6.5 percent threshold.” – Ben Bernanke, November 20, 2013
Source: U.S. Board of Governors of the Federal Reserve System
11
U.S. Employment (Non-Farm) U.S. Employment Tracker Total Nonfarm Employment, 000’s 138,000 137,000
At the current rate, we will reach prerecession peak by June 2014
136,000 135,000
8.7m jobs lost 6.7m jobs gained
134,000 133,000 132,000 131,000 130,000
129,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bureau of Labor Statistics
12
U.S. Job Growth By Sector Oct 13/Oct 12, % chg. Natural resources and mining Professional and business services Construction Leisure and hospitality Retail trade Total nonfarm Education and health services Wholesale trade Financial activities Transportation and Utilities Other services Information Manufacturing Government
-1%
0%
1%
2%
3%
4%
5%
6%
Source: Bureau of Labor Statistics
13
But Still Very Uneven Jobs Regained In Recovery, Select Markets Market Washington, DC Metro Houston Dallas New York, NY Baltimore San Francisco Minneapolis Seattle Atlanta Philadelphia Miami Chicago Santa Ana Phoenix Los Angeles Newark
Jobs Regained (%)
Jobs Lost During Recession (000's)
Jobs Added During Recovery (000's)
376% 335% 229% 190% 163% 138% 130% 101% 90% 79% 71% 70% 60% 59% 53% 29%
-25 -75 -81 -158 -41 -61 -90 -101 -156 -59 -63 -237 -128 -181 -296 -61
93 249 184 278 66 84 117 103 141 47 44 165 77 106 156 18
Source: Bureau of Labor Statistics, Cassidy Turley Research
14
Momentum Tracker Job Growth: Oct 2013 vs. Oct 2012, % Change
Tampa Charlotte Dallas Houston Orlando Denver San Jose
Momentum Tracker Tampa Charlotte Dallas Houston Austin Nashville Orlando Atlanta Denver Salt Lake City Seattle San Jose Minneapolis San Francisco Raleigh Phoenix Louisville Santa Ana Boston San Diego
3.4% 3.3% 3.0% 2.9% 2.9% 2.8% 2.8% 2.7% 2.6% 2.5% 2.5% 2.5% 2.4% 2.3% 2.1% 2.0% 2.0% 2.0% 1.9% 1.8%
New York Portland Newark Indianapolis Baltimore Chicago Los Angeles Charleston Edison San Antonio New Orleans Columbus Kansas City Cincinnati Sacramento Oakland St. Louis DC Metro Milwaukee Dayton
1.7% 1.7% 1.6% 1.4% 1.4% 1.4% 1.4% 1.2% 1.1% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.6% 0.4% 0.3% 0.2% -0.8%
Represent the change in ranking since 2013Q1. Source: Bureau of Labor Statistics
15
Sales & Pricing Trends
16
U.S. Sales Volume $600
Billions
$500 $400 $272
$300 $200 $100 $0 02
Yr-Over-Yr % Chg
120%
03
04
05
06
07
08
09
10
11
12
YTD 13
80% 40% 0% 02 -40%
03
04
05
06
07
08
09
10
11
12
YTD 13
-80% 
Sales volume for 2013 on pace for $319B – the highest level in the recovery, but still 55% below the peak in 2007.
Source: Real Capital Analytics
17
Sales Volume Across Property Types
Sales Volume Jan – Oct 13 (Billions)
$37.2 $12.0 Land
$74.3
$80.7
Office
Multifamily
$46.8
$21.0
Hotel 34%
29%
Industrial
Retail
31%
29%
23% 17%
Yr/Yr % Change
Land
Hotel
Industrial
Retail
Office
Multifamily
Source: Real Capital Analytics
18
Sales Volume by Metro All Property Types Rankings Q1-Q3 2011
2012
2013
Market
1 2 7 4 3 9 8 6 13 10 16 5 11 15 18 12 14 17 19 20
1 2 6 4 5 9 11 8 7 12 13 3 10 14 17 15 19 18 20 16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Manhattan Los Angeles Houston Dallas Chicago Atlanta Suburban VA Boston Seattle Washington, DC San Jose San Francisco Phoenix Denver NYC Boroughs San Diego Northern NJ Miami Las Vegas Orange County
Q1 – Q3 13 Sales Volume ($B)
YOY % Change $23.6
$18.1 $9.7 $9.6 $8.0 $8.0 $7.3 $6.5 $6.0 $5.4 $5.3 $5.3 $4.9 $4.8 $4.5 $4.1 $4.1 $3.4 $3.1 $2.9
35% 34% 31% 34% 14% 19% 21% 10% 18% 12% 14% 15% 10% 9% 19% 10% 13%
-2% 3% 123%
Source: Real Capital Analytics
19
Buyer/Seller Trends Foreign
Inst'l/Eq Fund
Listed/REITs
33%
Buyers
10% 46%
07 
55% 17%
9%
34% 18%
User/other
41%
42%
15%
21%
24%
8% 16%
27%
32%
29%
23%
08
09
10
11
12
YTD 13
Public REITs are gaining market share, accounting for 21% of properties purchased 2013YTD, compared to 15% in 2012.
41% 52%
Sellers 
38%
49%
Private
25% 13%
41% 16%
43%
43%
45%
41%
9%
12%
8%
11%
34%
28%
28%
33%
24%
19%
22%
4%
5%
7%
7%
10%
12%
7%
07
08
09
10
11
12
YTD 13
Institutional/Equity Funds have accounted for 33% of property dispositions 2013YTD, compared to 28% in 2012.
Source: Real Capital Analytics
20
Top 25 Buyers/Sellers in the U.S Total Investment Volume, Past 12 Months ($ Billions) $0 Blackstone Equity Residential Spirit Realty Capital Blackstone AvalonBay Communities American Realty Capital Starwood Capital Group JP Morgan Caisse de Depot GIC (Govt of Singapore) Invesco RE Brookfield Asset Mgmt Realty Income Corp CalPERS Cole RE Investments Vornado Realty Trust Lone Star Greystar RE Partners TIAA-CREF MetLife ARCP Goldman Sachs DDR MAA REIT Norges Bank Invt Mgmt Related Companies
$10
Buyers
$20 Lehman Bros Holdings Cole RE Investments Blackstone Equity Residential Fortress GE Capital Inland Real Estate Group Goldman Sachs Hines Carlyle Group JP Morgan Invesco RE Colonial Properties Trust AR Capital Trust Forest City CBRE Westfield Group CapLease Rockpoint Group Beacon Capital Partners CalPERS Morgan Stanley TIAA-CREF CBRE Global Investors Prudential RE Investors
$0
$20
$40
Sellers
Source: Real Capital Analytics
21
U.S. Treasury Rate vs. Cap Rate Office
Industrial
Cap Rate 10-yr Treasury Rate
10%
10% 8%
6.93%
6%
6%
Average = 384 bps 414 bps
4% 2%
7.65%
8% Average = 416 bps
486 bps
4% 2.79%
0%
2%
2.79%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13
0%
Multifamily
Retail 10%
10%
8%
8%
6.96%
6.15%
6%
Average = 301 bps
2.79%
Oct-13
2012
2011
2010
2009
2008
2007
2006
0% 2005
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13
0%
2% 2004
2.79%
2003
2%
4%
2002
4%
Average = 370 bps 417 bps
336 bps
2001
6%
Source; Real Capital Analytics
22
Commercial Property Index Moody’s/RCA CPPI Indices 220
National Major Markets Non- Major Markets
200 180 160 140 120 100
Aug-13
Dec-12
Apr-12
Aug-11
Dec-10
Apr-10
Aug-09
Dec-08
Apr-08
Aug-07
Dec-06
Apr-06
Aug-05
Dec-04
Apr-04
Aug-03
Dec-02
Apr-02
Aug-01
Dec-00
80
Source: Real Capital Analytics
23
NCREIF Returns vs. 10-Year No clear pattern between interest rates & returns
2013Q2
2012Q3
2011Q4
2011Q1
2010Q2
2009Q3
2008Q4
2008Q1
2007Q2
2006Q3
2005Q4
2005Q1
2004Q2
2003Q3
-4%
2002Q4
-2%
2002Q1
0% 2001Q2
0% 2000Q3
2% 1999Q4
2%
1999Q1
4%
1998Q2
4%
1997Q3
6%
1996Q4
6%
1996Q1
8%
1995Q2
8%
-2% -4%
-6%
-6%
-8%
-8%
-10%
-10%
-12%
-12% NCREIF NPI Office, Rate of Return, %
10-Year Treasury Yield, %
Source: NCREIF, Federal Reserve
24
24% 24%
20% 20%
16% 16%
12% 12%
8% 8%
4% 4%
16% 20%
12% 15%
8% 10%
4% 5%
0% 0%
Multifamily Tampa Milwaukee San Diego Baltimore Kansas City Minneapolis Atlanta Columbus Los Angeles Charlotte San Francisco U.S. Louisville Denver Dallas Nashville San Jose Indianapolis Cincinnati Phoenix Central NJ Houston Saint Louis
Northern NJ Sacramento Central NJ Minneapolis DC Metro Boston Tampa Atlanta Oakland Raleigh San Diego Los Angeles U.S. New York San Francisco Nashville Baltimore Phoenix Dallas Denver San Jose Charlotte Houston
Office
Los Angeles Minneapolis DC Metro New York Oakland Nashville Baltimore Dallas Phoenix Central NJ San Diego Sacramento U.S Raleigh Indianapolis Houston San Francisco Boston Denver Northern NJ Cincinnati Charlotte San Jose
Northern NJ DC Metro Baltimore San Diego Orange County Boston U.S. Minneapolis Phoenix Atlanta Tampa Charlotte Dallas Los Angeles Denver Kansas City Raleigh San Francisco San Jose Houston New York Oakland Nashville
NCREIF Returns Index 2013YTD
Select Metros, unlevered returns Industrial
Retail
Source: NCREIF
25
4% New York Dallas Charlotte Boston Atlanta Houston Kansas City Oakland Raleigh San Jose U.S. Phoenix Tampa DC Metro Northern NJ Los Angeles Nashville Minneapolis Denver San Diego Baltimore San Francisco Orange County
15%
12% 12%
9% 9%
6% 6%
3% 3%
Multifamily
14%
12%
10%
8%
6%
14% 12% 10% 8% 6% 4% 2%
Columbus Milwaukee Cincinnati Houston Indianapolis Tampa Dallas Minneapolis Phoenix Kansas City Saint Louis Central NJ Atlanta Nashville U.S. Louisville Charlotte San Diego San Jose Baltimore Los Angeles Denver San Francisco
Office
Indianapolis Nashville Dallas Raleigh Boston Minneapolis Baltimore Charlotte Denver Oakland U.S DC Metro Houston San Diego Los Angeles San Jose Central NJ Phoenix Sacramento Cincinnati San Francisco Northern NJ New York
15%
Minneapolis Dallas Houston Atlanta Denver Saint Louis Central NJ Sacramento U.S. Los Angeles Tampa Boston San Diego Baltimore Northern NJ San Francisco Raleigh Phoenix Charlotte DC Metro New York Nashville San Jose
Historic NCREIF Returns Index
Select Metros, Average 1985-2013Q3 Industrial
Retail
Source: NCREIF
26
Debt/Equity Markets
27
CRE Debt Outstanding Total Q2 13 $2.45 Trillion Billion $855
Banks Other, 10% $557
CMBS, CDO & other ABS issues
Federal Govt, 3%
$388
Agency & GSE Portfolios and MBS Life Insurance Companies , 13%
Agency & GSE Portfolios and MBS, 16%
Banks, 35%
$326
Life Insurance Companies State & Local Government
$96
Federal Government
$84 $60
Finance Companies
CMBS, CDO and other ABS Issues, 23%
Other
$47
REITs
$35
$0
$200
$400
$600
$800 $1,000
Q2 13
Source: Mortgage Bankers Association
Q1 13
28
Lender Composition All Property Types
Pvt/Other
13%
11%
9%
11%
11%
Reg'l/Local Bank
12% 7% 10%
12% 7%
12%
14%
7%
16%
6%
15%
20%
14%
30%
27%
5%
5%
3% 11%
17%
2009
2010
Nat'l Bank Int'l Bank Insurance Gov't Agency
44%
Financial CMBS
9% 12%
26%
18%
5%
7%
17%
23%
24%
2011
2012
H1'13
Source: Real Capital Analytics
29
CMBS Issuance $, Billions
$250
$10
$200
$8
$150 $6 $100
Avg. = $79.8 $79.1
$4 $50 Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000

Nov-12
$2
$0
CMBS issuance is up 70% from 2012 and is on pace to reach $79B in 2013. Issues remain one-third of the peak level reached in 2007.
Source: Commercial Mortgage Alert
30
CRE Loan Supply vs. Demand Senior Loan Office Opinion Survey on Bank Lending Practices 100% 80% 60% 40% 20% 0% -20% Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 00 00 01 02 03 03 04 05 06 06 07 08 09 09 10 11 12 12 13 -40%
-60% -80%

% Tightening Credit Standards
% Reporting Stronger Demand for CRE Loans
The latest from the Fed Senior Loan Survey shows that demand for CRE loans is at an all-time high, and lending standards have loosened significantly.
Source: Federal Reserve
31
CMBS Maturity Schedule Upcoming Loan Maturity Volume $160 $140
$154
Other Industiral
$127 $129
$125
Multifamily
Billions
$120
Hotel
$100
Retail
$93
Office
$80 $55
$60 $40 $20
$33 $25 $8
$1
$7
$27 $20
$19 $10
$8 $12
$0
Source: Trepp
32
Capital Issuance REIT Capital Offerings, $ Billions $68.1
Q1 - Q3 13 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
$73.3 $51.3 $47.5 $34.7 $18.1 $36.0 $47.5 $31.7 $38.5 $25.6 $19.8 $18.8 $10.4
$0
$10
$20 IPO
$30
Common
$40 Preferred
$50 Unsecured
$60
$70
$80
Secured
Source: NAREIT
33
Public Equity Capital Flows Capital Raised by REITs $80 $68.1
$70
Billions
$60
$50 $40 $30 $20 $10 $0 00
01
02
03
04
05
06
07
08
09
10
11
12 YTD 13
Source: NAREIT
34
Outlook
35
NABE’s Consensus Forecast Annual Forecast Made Sept 2013 2013 Forecast
2014 Forecast
Median
Five Lowest
Five Highest
Median
Five Lowest
Five Highest
Real GDP, % change, Q4/Q4
1.9
1.5
2.5
3.0
2.2
4.0
CPI, % change, Q4/Q4
1.6
1.1
2.2
2.1
1.0
2.9
Personal Consumption Expenditures Price Index less food energy, % chg, Q4/Q4
2.0
1.1
1.7
1.7
1.2
2.4
Civilian Unemployment Rate, % annual average
7.5
7.4
7.6
7.0
6.7
7.3
Federal Funds Target, % year-end
0.125
0.125
0.147
0.125
0.125
0.750
10-Yr Treasury Note Yield, % year-end
2.76
2.43
3.12
3.29
2.50
3.80
Housing Starts, millions of units
0.95
0.90
1.01
1.16
0.95
1.41
Home Prices, FHFA, % change, Q4/Q4
6.0
2.7
9.7
4.8
2.0
7.5
Oil Prices, $ per barrel, December Average
100
93
107
100
89
112
S&P 500 Index, December 31
1700
1500
1754
1764
1590
1912
36
CT’s Baseline Forecast 2012 US Economy Real GDP, % Nonfarm Employment, ths. Office-using Employment, ths. Unemployment Rate, % Retail Sales & Food Services, % CPI Inflation, % CCI Fed Funds Rate 10-year Gov't Bond ISM Manufacturing Index West Texas Intermediate Office Sector Net Absorption, msf Vacancy Rate Asking Rents Industrial Sector Net Absorption, msf Vacancy Rate Asking Rents Retail Sector Net Absorption, msf Vacancy Asking Rents Apartment Sector Net Absorption, ths. Vacancy Asking Rents
2013
2014
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2012
Annual 2013
2.8 409 129 8.0 4.4 2.1 65 0.1 1.6 51 92
0.1 545 147 7.8 5.3 2.2 70 0.1 1.7 51 88
1.1 645 212 7.7 3.3 1.4 63 0.1 1.9 53 94
2.5 584 238 7.6 1.2 -0.03 75 0.1 2.0 50 94
1.8 478 109 7.6 4.3 2.2 80 0.1 2.7 54 97
2.6 519 118 7.4 5.8 2.4 82 0.1 3.1 54 99
2.9 536 122 7.3 4.1 2.9 83 0.1 3.3 54 101
3.2 586 134 7.2 4.2 3.2 85 0.1 3.5 54 101
2.8 2,237 696 8.1 4.8 2.1 67 0.1 1.8 51.7 94
1.9 2,227 677 7.6 3.7 1.5 75 0.1 2.5 53 96
3.2 2,286 622 7.0 4.5 3.2 87 0.1 3.6 55 101
7.7 15.8% $21.72
22.7 15.5% $21.67
6.1 15.5% $21.73
14.9 15.3% $21.75
14.1 15.1% $21.97
15.2 14.9% $22.05
14.1 14.7% $22.16
15.2 14.5% $22.27
51.1 15.8% $21.75
45.3 15.2% $21.88
56.6 14.4% $22.34
24.8 9.0% $5.07
40.3 8.7% $5.01
28.7 8.6% $5.05
26.7 8.5% $5.06
24.4 8.3% $5.09
23.2 8.2% $5.11
26.7 8.1% $5.12
22.1 8.0% $5.12
104.0 9.0% $5.05
103.0 8.4% $5.08
103.2 7.9% $5.12
1.7 11.0% $18.27
2.8 10.9% $18.30
2.9 10.8% $18.34
2.5 10.8% $18.39
2.6 10.8% $18.44
3.0 10.8% $18.49
3.4 10.7% $18.54
3.3 10.6% $18.59
10.3 11.0% $18.29
11.1 10.8% $18.41
13.4 10.6% $18.60
25.2 4.7% $1,009
42.9 4.6% $1,014
39.5 4.4% $1,018
32.2 4.3% $1,025
41.3 4.3% $1,032
51.4 4.3% $1,039
41.9 4.1% $1,044
39.8 4.0% $1,049
137.5 4.8% $1,004
164.5 4.3% $1,029
162.8 4.1% $1,051
2014
37
10-yr Gov’t Bond Forecast
Cassidy Turley NABE*
2013
2014
2015
2016
2017
2.5%
3.6%
4.5%
5.0%
5.0%
-
-
-
1.8% - 2.8% 1.9% - 3.5%
Moody's Analytics
2.2%
3.2%
4.3%
4.8%
4.6%
Federal Reserve
1.9%
2.7%
3.4%
4.3%
4.8%
CBO
2.1%
2.7%
3.5%
4.3%
5.0%
*year-end
The consensus forecast is that 10-Yr Treasuries will generally trend upwards from this point forward.
The 10-year averaged since 1980 = 6.71%; since 1990 = 5.17%
Source: Cassidy Turley
38
Capital Markets Overview & Forecast December 2013