Stocks dip amid rising bond yields: Weekly Market Recap

Over lunch with a friend who sticks strictly to safe investments this week, she shared her uncertainty about the direction of interest rates lately.

For instance, fixed deposit rates continued to decline this month, yet the 10-year average return on Singapore Savings Bonds (SSBs) has edged higher compared to last month. 

While the US Federal Reserve has started cutting rates, the pace of further reductions remains unclear.

In this context, we explore what the cut-off yield might be for the upcoming T-bill auction on 21 November.

Meanwhile, Singapore REITs have faced dividend pressure amid higher interest rates, but a few have defied the trend by increasing their payouts in the most recent quarter. We highlight which REITs are standing out.

While the Fed is taking a cautious approach, interest rate cuts by European central banks have been more resolute. To help you navigate this landscape, we’re hosting the SGX Discovery Series on 19 November to dive into the European S-REIT market. Learn more about Elite UK REIT, Cromwell European REIT, and IREIT Global to find out how they may benefit from the rate cuts. 

I hope to see you at the webinar!

Gerald, Founder of Beansprout

⏰ This Week In Markets

📈 Higher for Longer

What happened? 

US Federal Reserve Chairman Jerome Powell said that the central bank is not ‘in a hurry’ to lower interest rates.

This is because the strong economy will allow Fed officials to take their time in deciding how far and how fast to lower interest rates.

What does this mean?

Investors moderated their expectations of interest rate cuts following strong economic data and comments by Powell.

According to the CME Fedwatch Tool, the probability of a Fed interest rate cut in December fell to 62% from 85% one month ago. 

Why should I care? 

US government bond yields rose further, with the 10-year yield exceeding 4.5% in the past week.

The continued bounce in bond yields led to selling pressure for US stocks, partly erasing gains from the post-Election rally.

Meanwhile, Singapore REITs declined as higher bond yields weighed on the sector. Read more in our REIT Weekly Watch.

🚗  Moving This Week

• CapitaLand Ascendas REIT (CLAR) announced the acquisition of a parcel of land in the city of Summerville, a submarket of Charleston, South Carolina, in the US. The land will be developed into a new logistics property at an estimated total investment cost of US$70.5 million (S$94.8 million).
• Singtel 1H25 net profit fell 42.4% to S$1.2bn, due to exceptional items in the previous year. Excluding these, net profit rose 29.2%, due to bigger contributions from associates and joint ventures.
• StarHub 3Q24 net profit rose 11.1% year-on-year to S$40.4m, while revenue fell 5.8% to S$575.2m. The company maintained its expectation for FY24 revenue to grow at at least 1%-3%.
• IREIT Global portfolio occupancy was 0.2%-point lower at 89.6%. Year-to-date, it achieved rental escalation of 5.8%. It warned that 2025 distribution should be impacted as it is repositioning Berlin Campus into a mixed-use asset.
• Prime US Reit’s distributable income for the third quarter ended Sep 30, fell to US$8.5 million from US$14.7 million the year before. This was due to lower contribution from its properties as well as higher finance expenses. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The big important story

3 Singapore REITs that raised their dividends recently
 

Here are three Singapore REITs that managed to increase their dividends in the most recent quarter.

🤓 What we're looking out for next week

• Monday, 18 Nov: CapitaLand Ascott Trust EGM
• Tuesday, 19 Nov: SGX Discovery Series with Beansprout: Navigating the landscape of European S-REITs
• Thursday, 21 Nov: 6-month Singapore T-bill auction, Nvidia earnings

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 and Facebook group for the latest insights on Singapore stocks, REITs, bonds and ETFs.