This had the intended effect of lowering bond yields globally, staving off deflation and providing an economic stimulus. The great unwinding is now beginning outside the US:


» The European Central Bank tapered bond-buying from €60bn to €30bn per month in January 2018. The €2.3tn bond-buying programme is scheduled to end in September 2018, with the first rate rises anticipated in mid-2019.


» The Bank of Japan began reducing its massive QE programme (equivalent to 80% of GDP) through unannounced reductions in bond purchases, described as ‘stealth tapering’. Inflation remains low and rate hikes unlikely.


» The Bank of England is following its own path given Brexit uncertainty. No plans for QE reductions have been announced, but the Term Funding Scheme closed on 28 February 2018. Commercial bank lending rates are likely to rise. Official rate hikes are expected, but remain linked to Brexit, sterling and business confidence.


In comparison to what is being done in the US, these initial policy adjustments have been modest, so far. Given the market reaction to US moves, removing the vast stimulus will be done very gradually, especially in markets vulnerable to political instability (especially the UK & Eurozone). The transition period will be measured in years and will most likely move in line with the natural expiration rate of the QE bonds that are held, rather than any aggressive programme to begin selling the accumulated stock of bonds. In this respect, the financial tide may have turned, but it looks more like a gradual medium-term transition to a ‘new normal’ rather than a rapid return to the previous financial regime.


£450bn $4.2tn €2.3tn ¥418tn


When will the tide turn on commercial property? MIPIM 2018 | Colliers International 7


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16