Brookfield Corp., the parent company of downtown Los Angeles' largest office landlord, has defaulted on loans tied to two buildings due to low demand for office space amid the rising popularity of remote work. The company chose not to refinance or extend the debt, and the expected value of defaulted loans is $755 million. The DTLA Fund Office Trust Investor portfolio is backed by $2.28 billion in secured debt, and this default is expected to become a risk to other loan in their portfolio. Investors hoped that it was not the first domino to fall as high interest rate put pressure on real estate portfolios.
EQUITY
U.S. markets ended sharply lower on Thursday due to the expectation of further tightening of US monetary policy after reports of rising producer prices. The S&P 500, Nasdaq, and Dow Jones all saw losses of 1.38%, 1.93%, and 1.26%, respectively, while Tesla Inc. slid 5.70% after the company recalled some 362,000 cars amid concern that its Full Self-Driving (FSD) beta might cause a crash.
GOLD
Despite expectations of a tight inflation environment sparked by U.S. CPI figures and Federal Reserve officials leaning towards hawkish rate hikes, gold prices declined on Friday as the dollar and Treasury yields shot up. Copper prices have also fallen, but are expected to end the week higher due to optimism about China's economic recovery and supply risks in Panama.
OIL
Oil prices were on track for weekly losses due to a strong US dollar and rising U.S. Treasury yields, which weighed on commodities. Rising inventories and mixed economic data from China, coupled with risk-off trades following the Wall Street sell-off on PPI data, also caused a decline in prices. But OPEC+ cut production targets, and the IEA predicted China alone would make up nearly half of 2023's oil demand growth, driving demand and prices higher.
CURRENCY
The currency market saw the Japanese yen fall 0.6% to 134.80 against the dollar, the dollar index rise to its highest level since early January, and Treasury yields surge overnight due to a higher producer price index and hawkish Fed official speeches. In addition, the Chinese yuan, Malaysian ringgit, South Korean won, Singapore dollar, and Thai baht all experienced sinking as the fourth quarter economic data showed growth that was less than expected for Thailand.
