Location Strategy Chartbook 05.23.2026

Fed governor Chris Waller said on Friday that he agreed with several other senior policymakers who have said the central bank should shift away from its “bias” towards easing rates. Minutes from the central bank’s April meeting released this week showed that “many” officials had taken this view, including a trio of regional Fed bosses who had dissented with the inclusion of the easing bias in April’s statement.

The market is pricing in a 64% probability that rates will hike before the end of the year.

US government bond yields have surged this month. Hotter-than-expected inflation data may be the primary cause, but there are several drivers behind the move, says Phillip Lee, head of Real Money Rate Sales in Goldman Sachs Global Banking & Markets.

US bond yields have surged as sticky inflation, resilient growth, and global yield spillovers push investors to scale back expectations for Federal Reserve cuts and price in pauses and higher rates for longer. At the same time, persistent fiscal deficits, heavy Treasury supply, and rising debt sustainability concerns are driving investors to demand extra compensation to own long-term government debt.

While shorter-term rates have risen as well, the move has been particularly notable in long-term Treasuries. This week, the 30-year yield hit its highest level in 19 years.

Lee expects to see the move continue. “I think rates are going higher,” he says. In particular, he expects that longer-term yields will continue to rise, as investors continue to demand more compensation for owning longer-term bonds, due to the potential for higher inflation and higher bond issuance. Shorter-term rates, on the other hand, could be driven more by Fed policy, which Lee expects to be relatively balanced between hikes and cuts in the years ahead.

Americans have been struggling for months with high gas prices and persistent inflation, sending consumer sentiment to a record low. Now retailers like Walmart and Lowes are getting louder about their warnings that spiking fuel costs driven by the US-Israel war with Iran will soon be reflected in the prices of products on their shelves.

When that happens, it’s only going to make US affordability problems that much worse. “We are concerned that the consumers have less ability to spend” even now, said Joe Feldman, an analyst at Telsey Advisory Group. Looking ahead, “the lower-income consumer is going to become even more challenged.”

At Walmart, Chief Financial Officer John David Rainey said the company has seen some habits change: consumers bought fewer gallons per visit at Walmart pumps in the first quarter, with the average number falling below 10 for the first time since 2022. “That’s an indication of stress,” he said.

WSJ: When it was released in early May, the Michigan survey’s preliminary reading hit a fresh record low against a backdrop of rising gas prices. Those continue to climb, so it’s somewhat natural to again attribute consumers’ sour attitude to inflation.
 
In 2022, some interesting questions in Michigan’s broader survey, beyond the index, didn’t show such extreme pessimism. That included views on making real, inflation-adjusted income gains over the next five years, and on the prospect of keeping a job over that time frame. In 2022, people were more confident of not losing a job over that span than they had been in the late 1990s.
 
Some of those readings for May and April haven’t been released yet. But people’s confidence on those five-year measures has been falling alongside the headline sentiment index. The most recent data for respondents’ five-year job-loss fears, from March, was near its all-time high.
 
Likewise, the Conference Board consumer confidence index’s “vibes” weren’t close to record lows in 2022. That headline index incorporates questions about employment conditions and family income. Recent readings, though, have been below 2022 levels.
 
Another measure, from the New York Fed’s Survey of Consumer Expectations, is close to its lows for respondents’ expectation that if they lost their job, they would find another within three months.
 
It is one thing to be unhappy about inflation when you have to, say, seek out a better job, or a second job, to keep up. It is another thing to worry that you won’t even have those options.
 
“The recent decline in sentiment is more driven by weaker economic fundamentals,” says Joseph Briggs, co-head of the global economics research team at Goldman Sachs. He said that points to a likely decline in consumer spending growth in the back half of this year.

A limited-service hotel can run at lower occupancy levels and still generate meaningful gross operating profit margins, or GOP margins.

A review of a small sample of limited-service hotels across major U.S. markets shows they operate under a different profit model than full-service hotels, with lower break-even points, stronger flow-through and stronger margins.

Across this subset, break-even occupancy levels for the majority of markets generally range between the high-20% and high-40% range, materially below what is typically observed in full-service hotels. Markets such as Seattle and San Francisco require just 27% to 29% occupancy to cover operating costs, while New Orleans and San Diego fall in the low- to mid-30% range. Even in higher-cost environments like Washington, D.C., and Chicago, break-even levels top out in the mid-40% range.

With annual average occupancy levels consistently in the 70% to 80% range across the sample, most properties operate well above break-even, allowing a larger share of incremental revenue to flow through to gross operating profit. As a result, GOP margins in this sample are notably strong, with roughly half the markets exceeding 40%, including Seattle, Miami, San Diego, Phoenix, Tampa Bay, Washington, Orange County, Orlando and Chicago.

Average daily rates range from just over $100 in markets like Houston and Atlanta to the mid-$170s in San Francisco and San Diego. Despite these lower rates, margins remain strong because of leaner staffing models, reduced amenities and lower fixed-cost exposure.

Costar: "The truth is, and this is whether you're staying in a hotel or not, people don't sit down for a full breakfast anymore," said Steve Palmer, founder, managing partner and chief vision officer at The Indigo Road Hospitality Group.

Guests want a juice bar, a to-go coffee and a few sandwich options, Palmer added, explaining that breakfast — and to some extent, lunch — happens on the go, so hotels need to be able to provide that option.

"Our development philosophy right now, in all of our hotels, is [to build] a very active, robust coffee bar," he said.

If done right, Palmer said, these coffee bars can activate the hotel lobby and become a place where guests — and even locals — go to socialize.

The exception to the quick-breakfast trend, Palmer said, is resorts. Laura McKoy, chief creative officer at Omni Hotels & Resorts, agreed that resorts still need to offer a traditional breakfast dining option.

But McKoy said Omni is also investing in enhancing its coffee shops on property to provide guests an "in-between option."

At a few recently renovated resorts, McKoy said she's repositioned the coffee bar to be near the pool area. The high-traffic space makes it easier for guests to access, and the cafe can also serve ice cream to cater to afternoon crowds.

For Omni's large conference hotels, the strategy is also to find the best visibility — such as putting the cafe on the side of the hotel by the convention center entrance — but also providing more substantial food options. McKoy said Omni has started to roll out an Amazon grab-and-go station where guests can self-checkout items, which, she added, has been received well so far.

KB Home announced on Thursday that it will expand into the Atlanta market, closing its first land deal (110 homesites) and setting the stage for a growing presence in one of the country's most active homebuilding markets.

U.S. single-family homebuilding activity is heavily concentrated in high-population-growth pockets in Arizona, Texas, Florida, the Carolinas, Alabama, Tennessee, and Georgia—markets where land is available to entitle and build on, regulatory environments are more permissive, and population growth continues to generate underlying need for more housing stock.

Toll Brothers was asked on Wednesday about which housing markets they could eventually target for M&A/entry. Toll Brothers leadership suggested a growth market like Indy. “To your question about the remaining spots on the map, you know, there are parts of the Midwest where we don't have a footprint today. Indianapolis, Minneapolis are two spots that come to mind… I think we'll continue to do this type of acquisition, like you saw with Buffington and Northwest Arkansas. We've now done 16 acquisitions over the last 32 years.” Karl Mistry, CEO of Toll Brothers, said on their May 20, 2026 earnings call.

All 15 of the biggest homebuilders tracked by ResiClub are seeing year-over-year margin compression

Bigger incentives and outright price cuts in the weakest markets, coupled with stubborn land prices, are squeezing margins