Leading Indicators | Calmer waters, cautious outlook

Swap rates remain stable as inflation risks recede

Swap rates remain relatively stable, suggesting only a modest level of risk remains embedded within markets. Caution around the economic outlook persists, but inflation concerns are continuing to subside. Notably, Oxford Economics' baseline scenario had already assumed a resolution to the conflict by September. With tensions easing sooner than expected, it has revised down its inflation outlook by around 1% from the levels anticipated at the height of the conflict.

Oil back to pre-war levels

With supply fears fading and flows through the Strait of Hormuz returning to normal, oil markets have quickly retraced their conflict-driven spike. Citi Research now expects Brent crude to drift towards $60-65 per barrel by year-end, as weaker demand and improving supply dynamics weigh on prices. For UK CRE, a calmer energy backdrop should help ease inflationary pressures and occupier costs, providing a modest tailwind for property values and demand.

London’s strength as premier tech hub reflects robust occupier market - strongest in EU

London remains a global powerhouse for startups, ranking #3 worldwide, following Silicon Valley and New York, according to the latest Global Startup Ecosystem Report. Valued at $438 billion, its startup ecosystem is by far the largest in Europe, generating more than 2.5 times the value of Paris and almost five times that of Berlin. With 72 active unicorns (startups valued at $1B+), and a robust funding pipeline, London is poised for continued growth in high-value tech sectors.