Weekly Recap: Stocks rise and T-bill yield falls as inflation eases

Inflation still seems to be at the back of many of our minds. 

My ex-colleague shared that the Old Chang Kee at Suntec City was closing down, and reminisced that it was one of our favourite tea break spots in the past. 

This led another friend to chime in that with many things becoming more expensive, it’s not surprising that there also appears to be fewer tourists compared to earlier this year. 

Hence, the moderation in US inflation this week may provide some relief, after it has stayed persistently high over the past year. 

With bond yields coming down, we share what this may mean for the upcoming 6-month Singapore T-bill auction on 20 June. 

One of the ways to beat inflation is to invest in strong dividend-paying stocks that offer an attractive yield.

Keppel Infrastructure Trust appears on our screener as one of the highest dividend-paying stocks in Singapore. 

We take a closer look at Keppel Infrastructure Trust to find out if its infrastructure assets can sustain a high dividend payout. 

At the end of the day, it may be hard to predict whether inflation will ease or persist. In this case, the best way to cope with future price increases may simply be having a sound financial plan. 

Gerald, Founder of Beansprout

⏰ This week in markets

😀 Easing inflation brings some relief

What happened? 

The US consumer price index (CPI) rose by 3.3% in May compared to the previous year, below market expectations of a 3.4% increase.

This also represented an easing of inflation compared to the 3.4% increase in the CPI in April. 

What does this mean?

The moderation in inflation brought relief to investors, but did not provide sufficient confidence for the Fed to start lowering interest rates. 

In fact, Federal Reserve officials are now projecting only one rate cut for 2024, down from three cuts from its forecast in March. 

On a more positive note, Fed Chairman Jerome Powell noted that no one on the committee has interest rate hikes in their base case. 

Why should I care? 

The S&P 500 climbed to a record high as the moderation in inflation led investors to expect more rate cuts this year. 

At the same time, US and Singapore government bond yields fell. If you are looking to lock in the yields on US Treasuries, we find out if they are a good alternative to Singapore T-bills to earn an attractive yield on our idle cash. 

🚗  MOVING THIS WEEK

• DBS is aiming to manage $500 billion for its wealth clients by end of 2026, an increase from $365 billion in 2023. 
• Mapletree Logistics Trust is divesting Mapletree Xian Logistics Park at RMB70.5 million. This is 0.7% above the property’s valuation of RMB 70 million as at 31 March. The REIT also entered into a purchase agreement to divest its property at 119 Neythal Road for $13.8 million. The sale price is 34.0% above the property’s latest valuation of $10.3 million as at 31 March.
• Seatrium and GE Vernova Consortium secure third contract to build HVDC System for TenneT’s Offshore Grid project in the Netherlands.
• Alibaba cut its stake in Singpost to 11.34%, from 14.56%, after the sale of 72.5 million shares at S$0.46 each. 
• Apple announced new artificial intelligence features, including tools supported by OpenAI’s ChatGPT, at its annual Worldwide Developers Conference. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

Keppel Infrastructure Trust - Resilient assets support attractive yield

Keppel Infrastructure Trust (KIT) invests in infrastructure assets that provide stable cash flows in developed markets. It offers an attractive distribution yield of 8.5% for FY24E.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 17 June: Singapore Public Holiday 
• Tuesday, 18 June: US retail sales data
• Wednesday, 19 June: SIAS webinar on introduction to bonds
• Thursday, 20 June: Singapore 6-month T-bill auction, SIAS Dialogue with OCBC for Great Eastern Holdings Shareholders

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar

Source: SGX, Bloomberg, Refinitiv

Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.