What Yield Curve Inversion Means for CRE Markets

3-Month Treasury Yield Rises Above The 10-Year

• The 3-month and 10-year treasury yield curve inverted last week, signaling heightened risk of an impending recession
• An inverted yield curve is not a foolproof indicator. A recession followed 8 of the last 10 inversions

Expectations Point Toward A Mild Downturn If One Occurs

• Economists continue to forecast very mild decreases in economic growth for the first two quarters of 2023
• The most significant factor influencing recession risk has been hawkish Federal Reserve policy in response to elevated inflation

CRE Investors Should Keep Long-Term Outcomes In Mind

• Intense media discussion of downside risk can weigh on investor sentiment, often pushing investors to the sidelines, but downturns are followed by growth that generally lifts CRE performance
• The weakened short-term economic outlook offers investors an opportunity to calibrate their strategies to capitalize on the next expansion cycle

*Through October 27
Sources: Marcus & Millichap Research Services, Federal Reserve

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