20231225-1229 Newsletter

Macro & Business Matters?in the Globe

US:?US short-term financing rate spikes as dealers close books for 2023

A measure of the cost of borrowing short-term funds backed by U.S. Treasuries spiked this week to its highest since 2019, a move some market participants attributed to dealers closing their balance sheets for the year.

The DTCC GCF Treasury Repo Index , which tracks the average daily interest rate paid for the most-traded General Collateral Finance (GFC) Repo contracts for U.S. Treasuries, jumped to 5.452% on Tuesday from 5.395% last week. That is the highest level since September 2019, when dwindling bank reserves sent the cost of overnight loans as high as 10%, forcing the Federal Reserve to intervene.

The spike resulted from dealers closing their books for the year, which meant borrowers had to pay more to fund their collateral, several market participants said.

"It looks like there was a need for cash which drove up the overnight fund rates," said Tom di Galoma, managing director and co-head of global rates trading at BTIG. "There is a lot volatility in overnight rates due to year-end."

A spike in the price for repurchase agreements, or repos, in which investors borrow against Treasury and other collateral, can be a sign that cash is getting scarce in a key funding market for Wall Street. A three-day jump in the Treasury GCF Repo Index from Nov. 30 to Dec. 4?raised concerns?on whether cash levels were sufficiently healthy.

TUKERY: Turkey's minimum wage hike seen fuelling prices, hitting inflation outlook

Turkey's larger-than-expected minimum wage hike, which impacts some 7 million workers, is expected to push already elevated inflation even higher in the coming months, economists and sector officials said.

Labour Minister Vedat Isikhan?said on Wednesday?the monthly minimum wage will be 17,002 lira ($578) in 2024, a 49% increase from the level determined in July and a 100% hike from January.

Economists said the wage hike was set to cause a medium-term deterioration in the outlook for inflation, which was already expected to hit around 70%-75% in the first half of 2024.

"A two step increase in the minimum wage would have been better both for employees and employers and would not cause a sudden spike in inflation. Prices will increase by at least 25%-30%. This will be reflected in retail prices," said Berke Icten, the head of Turkey's Shoes Manufacturers Association.

The minimum wage is usually revised once a year but due to high inflation and a depreciating currency, the government raised it every six months in the last two years.

GREECE: Greece plans to raise up to 10 bln euros from debt markets in 2024

Greece plans to raise up to 10 billion euros ($11.02 billion) from debt markets via short- and long-term bond issues next year, its debt agency PDMA said on Friday.

Outlining its 2024 strategy, PDMA said Greece plans to repay ahead of schedule more bailout loans and reduce the amount of T-bills in circulation.

The agency's plan confirmed?a Reuters report?in November that Greece plans to repay earlier more loans owed to euro zone countries under its first bailout.

"Funding strategy for year 2024 will focus on the continuous presence in the international debt markets, accompanied by the reduction in the level of public debt," the debt agency said in a press release.

It added that it might issue its first green bond next year, a move that was earmarked for this year.

The country, which earlier in the year regained an investment-grade credit rating after 13 years, also plans to continue bond reopenings through auctions of up to 500 million euros each, to add liquidity in specific parts of the yield curve.

SOURECE: REUTERS,?Daily News, Daily Sanah

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Global CRE & Tourism?

US: U.S. Home Price Growth Continued to Slow in November

According to Redfin's latest Home Price Index, U.S. home-price growth slowed for the third straight month in November 2023.

Redfin also says U.S. home prices were up 0.6% from October 2023, the smallest monthly increase since June, and were up 6.4% from a year earlier.

"It's a better time to be a homebuyer than it was two months ago," said Redfin Senior Economist Sheharyar Bokhari. "Buyers today have more options to choose from, which is taking pressure off of home prices. Mortgage rates dropped below 7% last week for the first time since August, shaving hundreds of dollars off monthly payments. That news seems to have lured more sellers to the market, which should further improve home buying conditions in the new year."

New listings climbed 1.3% month over month in November to the highest level in over a year on a seasonally adjusted basis as homeowners got tired of waiting on the sidelines, providing relief to buyers who have been grappling with an historic shortage of homes for sale. Pending sales also rose, increasing 2% month over month to the highest level in a year.

This month, new listings have been climbing even faster, and Redfin has seen double-digit year-over-year increases in the number of homeowners contacting our agents to inquire about listings. On the buy-side, mortgage purchase applications have been rising on a seasonally adjusted basis as mortgage rates have come down.

GREECE: LTI: Two Hotels in Greece Among World’s Best Luxury Arrivals in 2023

Two hotels in Greece, the?Mandarin Oriental, Costa Navarino?and?The Dolli?in?Athens, are among the 15 global arrivals that?Luxury Travel Intelligence (LTI)?rates as this year’s best.

A global, members-only organisation, LTI provides digital reporting for affluent travellers who wish to make informed travel decisions, based on honest and highly detailed intelligence.

According to the list,?the world’s best new luxury hotel for 2023 is Bulgari in Rome, a new property of the renowned jeweller.

The top new properties of the year include three hotels in the UK, two in Rome and two in Greece: the?Mandarin Oriental, Costa Navarino, which came fourth on LTI’s World’s Best New Luxury Hotels 2023 list and?The Dolli?that came in 14th.

TURKEY: Foreign tourists spend 11 nights on average in Türkiye Survey

Foreign tourists spend on average 11 nights during their visit to Türkiye, according to payments system company Visa’s global travel intentions survey.

Some 80 percent of foreign visitors stay at hotels, while safety, hygiene and location are the main criteria for holidaymakers for choosing an accommodation facility, showed the survey.

Foreign tourists spend on average $2,900 per visit, while the figure goes up to $4,015 for families traveling with children aged older than 12.

Around 57 percent of foreign holidaymakers use credit cards for their payments.

Foreign tourists stated they prefer Türkiye for their holiday destination because it is budget-friendly and offers good shopping opportunities.? Food also appears to be one of the reasons why travelers chose Türkiye for vacationing, according to the survey.

Foreign tourist arrivals in Türkiye increased by 10.8 percent in the first 11 months of 2023 from a year ago to 46.7 million.

The country’s tourism revenues reached $41 billion in the January-September period, marking a 20 percent year-on-year increase.

TURKEY: Hotel occupancy at nearly 100 pct in some Aegean resorts

The occupancy rate at hotels in some resort towns in the Aegean region has hit nearly 100 percent thanks to the New Year holiday.

The 3-day holiday lured people to go on vacation, said Mehmet ??ler, the president of the Aegean Touristic Enterprises and Accommodations Association (ET?K).

The hotel occupancy rate was around 80 percent two weeks ago, but now almost all accommodation facilities are fully booked, he said.

Ku?adas?, a popular holiday hotspot in the province of Ayd?n, will welcome not only local but also foreign tourists, according to Serdar K?ro?lu, the president of the hoteliers’ association in the town.

From January to November, some 4.4 million foreigners visited Edirne, accounting for more than 9 percent of all foreign tourist arrivals in Türkiye.

SOURECE: Google News, GTP, Greek City Times, PORTUGAL NEWS, Daily News, Daily Sabah

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Market Performance & Institution Views

European Hotel Industry is Not Afraid of the Cold

While Southern Europe posted the best hotel performances in October, the trend seems to be reversing in November. The first signs of the end-of-year festivities are benefiting the countries of Northern and Eastern Europe, which are world-famous for their ambience, while the warmer countries continue to attract sun-starved tourists.

The European hospitality industry turned in a fine performance in November, with an occupancy rate of 67.8%, up 1.9 points on 2022. Although the country is still 4 points behind 2019, the rise in the average daily rate (+18.2% vs. 2019) has enabled it to post a RevPAR of 78.7 euros, representing an increase of 8.2% compared to 2022 and 11.5% compared to 2019.

Only the low-cost segment is still lagging behind its 2022 level of activity (-1.3 pts), while the upscale segment is recording the strongest increase (+3.6 pts). Compared with 2019, these are the two segments lagging furthest behind (-4.6 pts for low-cost and -5 pts for upscale).

With the exception of upscale (+2.8%), all segments will see their average daily rate rise by more than 5% compared with November 2022.

All European countries are still below their pre-Covid occupancy levels, with the exception of Greece, which is up 1.7 points on November 2019. The United Kingdom and Spain also put in a notable performance, trailing 2019 by just -0.7 points.

The countries of Northern Europe are also showing remarkable dynamism, with the United Kingdom, Luxembourg and the Netherlands recording occupancy rates of 79.1%, 72.7% and 72.6% respectively.

In terms of prices, Spain stands out with double-digit growth (+12.7%) compared to 2022, followed by the Czech Republic (+9.9%). Once again, Eastern European countries are in the limelight, with the highest increases, such as Latvia (+7.7%) and Hungary (+7%). Southern Europe is not to be outdone, however, with equally remarkable increases in the average daily rate, including Italy (+6.3%), Portugal (+5.5%) and Greece (+4.9%).

SOURECE: HNR, CRE HERALD, Hospitality Investor