Fed's rate cut signal led to a surge in US stocks and Singapore REITs
The Santa Claus Rally came early when the Fed indicated that interest rates may be cut next year.
This drove the S&P 500 to its highest level this year. Singapore REITs also bounced as concerns on elevated interest rates eased.
With the sharp fall in US government bond yields, we find out what this may mean for the last 6-month Singapore T-bill auction this year.
If you are looking to lock in US dollar fixed deposit rates, we were still able to find 6-month and 12-month fixed deposit rates of 5.25% p.a.
As we approach the end of the year, learn more about how you can tap on the Supplementary Retirement Scheme (SRS) to enjoy tax relief.
↘️ FED SIGNALS RATE CUTS
The Federal Reserve kept its benchmark interest rate unchanged in its latest meeting, and indicated that there may be three interest rate cuts in 2024.
What does this mean?
Fed officials have projected that the Fed funds rate will fall to 4.6% by the end of 2024 from 5.25-5.5% currently.
This represents a faster pace of rate cuts compared to the previous projection of one rate cut in 2024.
In particular, Fed Chairman noted that the Fed is focused on “not making the mistake” of holding high rates for too long.
Why should I care?
Stock investors cheered the potential rate cuts, with the S&P 500 closing at a year-to-date high, and the Dow Jones Industrial Average (DJIA) reaching an all-time high.
There was also a sharp fall in government bond yields following the Fed meeting.
💡 THE BIG IMPORTANT STORY
The last 6-month T-bill auction this year will be held on 20 December.
🚗 WHAT'S MOVING
- CapitaLand Investment announced that revaluation losses for assets in China, Australia, Europe, the UK and the US will cause a significant decrease in its profit for FY2023 compared to FY2022.
- ST Engineering will acquire D’Crypt for S$67.5 million from Starhub to strengthen its cyber capabilities. D’Crypt specialises in cryptographic technology design and offers solutions in encrypted communications, single chip crypto token, secure computing and high-performance computing.
- Sembcorp Industries has been awarded a 117 megawatt-peak (MWp) project to solarise interim vacant land and the rooftops of five buildings on Jurong Island. The tender is the largest project by capacity awarded by a public sector agency in Singapore to date.
- Manulife US REIT voted overwhelmingly in favour of the recapitalisation plan proposed by its manager. Over 97% of the votes present at the EGM were in favour of each of the three inter-conditional resolutions.
- Sea Limited’s share price came under pressure after TikTok and GoTo announced that they are combining their e-commerce businesses in Indonesia. TikTok will take a controlling stake in the enlarged entity, and has committed to invest over US$1.5 billion over time.
Source: Bloomberg, CNBC, Financial Times, Business Times, Edge Singapore
🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK
- Tuesday, 19 Dec: SIAS Corporate Connect with First REIT
- Wednesday, 20 Dec: 6-month Singapore T-bill auction
Source: Bloomberg, SGX
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