In the U.S.:
- May nonfarm payrolls were a disappointing 75K versus April’s revised 224K reading. The Unemployment rate was unchanged at 3.6%. The disappointing reading may increase the odds of a Fed rate cut.
- Although Mexico has agreed to shore up its border security, it is still not viewed as enough for the White House to hold off on tariffs set to go into effect on Monday.
Federal Realty Investment Trust (FRT) announced the sale of Free State Shopping Center to New Market Properties, LLC, a wholly-owned indirect subsidiary of Preferred Apartment Communities, Inc., for $72.0M. Free State Shopping Center is a 264K square foot Giant Food anchored shopping center located in Bowie, Maryland.
- Bloomberg cited comments from PBOC Governor Yi Gang, who stated that China had plenty of room to adjust monetary policy if the trade war deepens. The comment could be seen as a sign that China is preparing for a prolonged trade dispute.
- May manufacturing PMI fell to 49.8 versus April’s 50.2 reading. Now below the crucial 50 mark, Japanese manufacturing continued to struggle with sluggish demand out of China.
A 50/50 joint venture between Mitsubishi Corporation and Digital Realty Trust has acquired a five-acre land parcel in Tokyo. Following the demolition of the existing structure on the land, the data center development is expected to deliver over 35 megawatts of IT capacity.
- German April industrial production fell 1.9% m/m versus March’s 0.5% m/m increase. Germany continues to be hampered by the China/US trade war and could also be the target of US auto tariffs.
- The London Times, citing a senior European source, said Germany and most other EU governments will back another Brexit delay until next spring regardless of who becomes UK prime minister.
Global retail operator Unibail-Rodamco-Westfield (URW) announced the placement of a USD750 million bond offering this week in accordance with rule 144A. The 10-year bond had a fixed coupon of 3.50%, benefitting from the recent drop in the 10-year US Treasury yield that is now in the low 2% range. The yield is down almost 40 bps over the last 30 days and over 80 bps in the past year. As a comparison with URW’s most recent borrowings in Europe, in February URW successfully place €1.5 billion of bonds in two tranches – a €750 million bond with an 8-year maturity and a 1.0% fixed coupon and a €750 million bond with a 15-year maturity and a 1.75% fixed coupon. The drop in sovereign bond yields this year has benefitted real estate companies with access to the bond markets as fixed income investors search for yield.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.