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House Retirements in Focus

April 9, 2024

Members of Congress are retiring at rates comparable to other cycles, but in this election cycle some lawmakers are making their exits a bit earlier than 2025.

What’s happening:

  • Rep. Ken Buck (R-CO): The Congressman from Colorado’s 4th district announced his retirement last November but resigned on March 23.
  • Rep. Mike Gallagher (R-WI) announced in early February that he would be retiring from the House at the end of his term. He then clarified that his last day would be on Friday, April 19.

Why this timing raised a few eyebrows:

  • If Gallagher had left the House just ten days earlier on April 9th, there would have been a special election to fill his seat as required by Wisconsin law. However, since he left after April 9th, the seat will stay vacant until November.
  • Rep. Gallagher has openly expressed frustration with his party about how they have been governing. Recently, he stated he wouldn’t commit to attending the party’s convention this summer.
  • The seat likely will stay in Republican hands come November, but candidates from both parties have declared interest in running for Wisconsin’s 8th Congressional District.

What this all means for Speaker Johnson and the Republicans:

The House is currently divided at 218-213 with four vacancies, which provides a challenge for Speaker Johnson who needs a two-vote majority.

  • When Rep. Gallagher officially departs on April 19, the majority will drop to one vote, a narrow margin not seen since 1919.
  • Speaker Johnson will have to contend with the motion to vacate from Rep. Marjorie Taylor Greene. The motion could be brought up as soon as Tuesday, April 9.

What they're saying: Rep. Greene contends that Speaker Johnson’s compromise with Democrats to keep the government open last month and his intention to bring additional Ukraine aid to the floor are reason enough to boot him from his post.

  • However, some Democrats have promised that if Speaker Johnson brings Ukraine aid to the floor they will protect him and table Rep. Greene’s motion.

When this margin won’t matter: Three special elections will take place between May 21 and June 25, which will likely add to the GOP majority.

If all these elections break for Republicans, as expected, Speaker Johnson will have a larger margin, though the fractious GOP conference will continue to create challenges for party leadership as votes on foreign aid and other program reauthorizations loom.

The bottom line: There may only be 81 legislative days left in the 118th Congress but there’s still time for additional precedents to be set, as Speaker Kevin McCarthy’s ouster was a first.

  • The government is only funded through September 30 and legislators will once again need to agree to take action for FY 2025 or risk a shutdown.
  • The 2024 election 209 days from today.

Please contact James Montfort (jmontfort@crefc.org) with any questions.

Contact 

James Montford
Manager, Government Relations
202.448.0857
jmontfort@crefc.org

Midterm elections countdown calendar
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.
House Retirements in Focus
April 9, 2024
Members of Congress are retiring at rates comparable to other cycles, but in this election cycle some lawmakers are making their exits a bit earlier than 2025.

News

Capital Markets Update Week of 4/8

April 9, 2024

Private-Label CMBS and CRE CLOs

  • Two private-label transactions totaling $1.1 billion priced last week:

- HTL 2024-T53, a $631.5 million SASB backed by a three-year, fixed-rate loan for MCR Hotels and Building and Land Technology (BLT) to refinance 53 hotels totaling 5,958 rooms across 14 states

- BX 2024-BRVE, a $428.5 million SASB backed by a floating-rate, five-year loan (at full extension) for Blackstone Real Estate Income to refinance 23 hotels totaling 4,002 rooms across 10 states

  • According to Commercial Mortgage Alert, three additional SASB transactions are in the market and are expected to price this week.
  • Year-to-date private-label CMBS and CRE CLO issuance totaled $20.5 billion, well ahead of the $7.8 billion for the same period last year.

Spreads Steady

  • Conduit AAA and A-S spreads were unchanged at +88 and +130, respectively. YTD, AAA and A-S spreads have tightened 28 bps and 35 bps, respectively.
  • Conduit AA and A spreads were unchanged at +150 and +250, respectively. YTD, they have tightened by 75 bps and 125 bps, respectively.
  • Conduit BBB- remained at +675. YTD, BBB- spreads have tightened by 225 bps.
  • SASB AAA spreads were also unchanged, ranging from +136 to +160, depending on property type. They narrowed from +160 to +188 at the start of the year.
  • CRE CLO AAA spreads held at +160 / 165 (Static / Managed), and BBB- spreads at +650 (Static / Managed). For the year, spreads are tighter by 40 / 35 bps and 50 bps, respectively.

Agency CMBS

  • Agency issuance totaled $2 billion last week, consisting of $1.4 billion in Freddie-K and Multi-PC transactions, $475.8 million in Fannie DUS, and $83.1 million in Ginnie transactions.
  • Agency issuance for the year is $25.8 billion, 4% lower than the $26.8 billion for the same period last year.

The Economy, the Fed, and Rates…

Economic Data:

  • The economy added 303,000 jobs in March, blowing past economists' forecasts of ~200,000. The unemployment rate edged down to 3.8%, as a separate survey showed 469,000 new entrants into the labor force. The labor participation rate climbed and, at 62.7%, is now above where it was a year ago.
  • Notable job gains were observed in healthcare, leisure and hospitality, construction, and government. Average weekly earnings and the number of hours worked both showed positive trends, underlining the upward pressure on wages amid a competitive job market.
  • Steadier goods spending and lower cost inflation seem to have relieved pressure on manufacturing. Last week’s ISM purchasing managers’ index confirmed that manufacturing returned to modest expansion in March after 16 months of contraction.
  • In cycles since 1951, ISM manufacturing surveys have never shrunk for more than 14 months without a recession. Manufacturing leaving contraction removes one of the economy’s last few soft spots.

Fed Policy:

  • The March jobs report underscored the robustness of the labor market, challenging the immediate necessity for Fed rate cuts and leading to a reassessment of the economic outlook among investors and policymakers.
  • According to futures markets, market anticipation of Fed rate cuts shifted significantly, with the probability of a rate reduction by June dropping from 66% to about 50%.
  • Federal Reserve officials, including Chair Jay Powell and Dallas Fed President Lorie Logan, signaled a cautious stance toward cutting interest rates amidst a robust labor market and inflationary pressures. They emphasized the need for more evident signs of inflation moving toward the Fed's 2% target.
  • Analysts and economists will closely monitor upcoming economic data, especially CPI figures, to gauge the Fed's policy direction. A consensus is leaning towards eventual rate reductions but diverging on the timing and magnitude.

Treasury Yields:

  • Bond yields rose after the release of the strong jobs data as investors scaled back bets that the Fed would cut interest rates soon. The two-year Treasury yield was up 13 bps on the week to 4.75%, while the 10-year was up 20 bps to 4.40%, its highest level since November.

You can download CREFC’s one-page MarketWatch with statistics covering the economy and the CRE debt capital markets here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

Contact 

Raj Aidasani
Managing Director, Research
646.884.7566

N/A
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.
Capital Markets Update Week of 4/8
April 9, 2024
Private-Label CMBS and CRE CLOs

News

Congressional Outlook  

April 9, 2024

The House and Senate are back this week from a two-week recess after funding the government.

What’s next: While the risk of a shutdown is no longer imminent, several difficult issues will confront lawmakers over the next few months. Senate Majority Leader Chuck Schumer (D-N.Y.) outlined his priorities in a Dear Colleague Letter last week.

  • Action on Ukraine funding is a top priority for many Democrats and Republicans, and while Speaker Johnson is supportive of Ukraine funding, action on it might prompt his ouster. More on this below.
  • The Foreign Intelligence Surveillance Act (FISA) expires on April 19 and progressive and conservative critics have demanded changes to FISA they claim will protect Americans. Proponents of FISA argue that some proposed changes will hamstring surveillance of foreign terrorists and adversaries.
  • Federal Aviation Administration (FAA) reauthorization is needed by May 10.
  • Funding to rebuild the Francis Scott Key Bridge in Baltimore could run into some partisan roadblocks.
  • Homeland Security Secretary Alejandro Mayorkas’ impeachment trial will likely begin Thursday. The Senate is unlikely to reach the 67-vote threshold needed to convict and remove him.
  • Additional Senate priorities include the bipartisan tax bill, the TikTok divestment bill, and appropriations for FY 2025.

Over in the House, Speaker Johnson is expected to take action on Ukraine funding, though it’s not clear how. The Senate-passed national security supplemental that packages Ukraine, Israel, and Taiwan funding is the quickest path, as any changes would have to be reapproved by the Senate and face procedural delays by opponents.

  • Johnson has floated other options for Ukraine funding, including forgivable loans, in an attempt to compromise with GOP opponents of additional spending.
  • Israel funding may come under additional scrutiny and opposition in the wake of the accidental killings of seven World Central Kitchen aid workers by Israeli forces.
  • Any action on Ukraine will likely prompt action on a motion to vacate Speaker Johnson, which Rep. Marjorie Taylor Greene (R-GA) filed on March 22. Democrats are expected to save Johnson, though the situation is fluid. See the “Retirements” article below for more details.

Contact David McCarthy (dmccarthy@crefc.org) with questions.

Contact 

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org


Congressional focus on Ukraine funding will be a major topic as Congress returns. 

 
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.
Congressional Outlook
April 9, 2024
The House and Senate are back this week from a two-week recess after funding the government.

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