Commercial real estate investors can be opportunistic in this time of volatility

The Ten-year posted massive increases after what Thirty Capital said was a “crazy” week, marked by massive volatility. Increasing inflation, continued tension over Ukraine, and anticipation ahead of interest rate hikes are all impacting the markets and making it harder to predict too far into the future. <p>Inflation has reached a 40-year high, with the Consumer Price Index posting a 7.5 per cent annual gain.</p> <h1>Panic and speculation impacting markets</h1> <p>The Two-year treasury actually jumped 21 basis points, mostly due to speculation that the Fed may actually hike by 50 basis points in March. Some are predicting even a 100-basis point increase by mid-summer.</p> <p>Says Thirty Capital Analyst Bryan Kern: “We’re not really sure how it’s going to pan out, but there was a lot of panic, a lot of speculation.</p> <p>“Then of course there was some news surrounding the potential invasion of Ukraine by Russia on Friday, so we saw rates kind of pull back a little bit,” he continues. “With all this volatility net net from last Monday to today, we're up about 6.5 to seven basis points.”</p> <p>Thirty Capital Analyst Jeff Lee says that on the financial side Thirty Capital is seeing a 30 plus percent increase in requests to reprice or forecast deals. “Everyone’s forecast is definitely fluid and changing.”</p> <p>Meanwhile, Thirty Capital Analyst Jay Saunders points out that last week Two-year SOFR swaps moved up 24 basis points alone on Thursday. “You just don’t see movement like that . . .  so the short-end of the curve is very volatile.”</p> <h1>Cap market struggling</h1> <p>Things were so crazy that at one point on Friday the cap market was completely frozen. “You simply could not buy a cap . . . there was not a dealer on the street,” says Jay.</p> <p>For commercial real estate investors trying to understand what the cap lockup and freeze means, Jay explains that over the next six months or so “as we go through what I suspect will be this change in the Fed's policy, we'll start to see actual rate increases to the