This week brought positive macroeconomic news. According to the Consumer Price Index (CPI) from the Bureau of Labor Statistics released on Wednesday, the inflation rate in July was 2.9% y/y, the lowest since March 2021.
On a monthly basis, consumer prices were 0.1% lower than in June, but still 0.2%. In other words, prices continue to rise, but at a slower pace. Stock markets welcomed the inflation news: the Nasdaq Composite (up 6.24%) and S&P 500 (up 4.65%) #rose .
the markets are confident that the U. S. Federal Reserve will cut interest rates, which are currently in the range of 5.25-5.50%. The central bank began raising interest rates sharply in March 2022, blasting #cryptocurrencies and stock markets in an attempt to curb rising inflation.
If inflation declines, the market expects a ~125 bps rate cut, which, according to data compiled by Federal Fund Futures, would be 4-4.25% by the end of the year. As a result, the pressure on consumers and businesses in a debt-laden economy should ease.
the federal government itself will set a record for interest payments, surpassing $1 trillion in Q1 2024 compared to $0.54 trillion in Q1 2020. Essentially, this means that debt payments are taking up most of the country's energy, even surpassing the massive military budget.
The start of a low interest rate cycle is usually followed by a recession, but stock prices could soar after the first rate cut, which is expected in September.
Prologis, which offers 115 million square feet of space, is not only a warehouse and distribution center, but also a hub for online fulfillment and business-to-business (B2B) models that are critical to the business. ), which is critical for the retailers that rely on them.
And conversely, these industrial real estate investment trusts (REITs) have the advantage of low borrowing costs. In ProLogis' latest earnings report for the second quarter, interest expense totaled $208.2 million, down from $149.8 million in the same period last year.
The bulk of the company's revenues came from rental income of $ 1.
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