U.S. CMBS issuance declined 8% in the first half of 2014 from a year ago as securitization shops saw increased competition from banks, insurance companies, and debt funds. Specifically, community and regional banks have been bidding smaller loans (<$20 million) very aggressively. U.S. CMBS issuance is expected to pick up during the second half of the year and finish strong with almost $20 billion already in the pipeline for the third quarter. Volume is being bolstered by single-borrower transaction that were fewer and smaller during the first quarter and started to gain in size during the second.
In a sign of confidence that the economy is gaing strength even as it gradually withdraws its support, The Fed announced on Wednesday that it plans to stop adding to its bond holdings in October. It did not address when it would raise short term interest rates, but investors generally expect that to start next summer.
The latest numbes from the BEA show that the U.S. GDP contracted at a 2.9% annual rate during the first quarter, far worse than the initial estimate of a 0.1% increase and the second estimate of negative 1%. There has been positive news from the Labor Department which announced that the U.S. economy added 288,000 jobs in June, making it the fifth consecutive month that employment growth has exceeded 200,000. This market the first time since 1999-2000 that the U.S. economy has generated such sustained strong job growth. Unemployment has dropped to 6.1%.
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