fxs_header_sponsor_anchor

News

US commercial real estate under pressure – Commerzbank

In the US, investors are concerned about the commercial real estate (CRE) market. Economists at Commerzbank provide an overview of the situation.

Neglected risks tend to lead to greater turbulence

It is likely that it will take several years to overcome the problems, particularly in the office real estate sector. 

The Federal Reserve does have instruments at its disposal with which it could probably prevent a systemic crisis; if the worst comes to the worst, it would probably also revive the ‘Bank Term Funding Program’ (BTFP), which is due to expire in March as planned. However, the banks' assets at the heart of the current difficulties are now commercial real estate loans, where significant defaults are certainly possible. This is an important difference to the turbulences of 2023. The bonds whose price losses triggered the problems back then were largely solid securities, especially US Treasury securities. Despite the price losses in the meantime, these were not at risk of default. Other instruments may therefore be needed to stabilize the financial markets.

That said, it is at least positive that the weaknesses in commercial real estate loans have been recognized. Experience shows that neglected risks tend to lead to greater turbulence.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.