Research - APRIL 29, 2021

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MetLife Investment Management: Summer 2021 CRE outlook

by Andrea Zander

A recovering economy and multiple rounds of fiscal stimulus have stoked inflation fears and sent Treasuries sharply higher in recent months, according to MetLife Investment Management.

The firm anticipates a modest pickup in inflation during 2021. It suspects it will be more transitory, and a function of the volatility in price levels exhibited during 2020. The firm does not believe inflation is likely to remain high until slack from the labor market is removed, however. Although this may occur in 2022 or beyond, for now Metlife’s research team does not believe sustained inflation is likely to occur while the unemployment rate remains above 4 percent.

Still, inflation fears have begun impacting interest rates, and the bellwether 10-year Treasury rate could end the year at 1.75 percent (from 0.92 percent in 2020), and the CPI-U could rise to 2 percent in 2021 (1.4 percent in 2020), according to the firm.

Although rising interest rates tend to translate into fea

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