STI pulls back and bond yields climb as Fed raises rates: Weekly Market Recap

The haze is back in Singapore, and the view outside has been a little less clear this week.

I think the markets feel a bit like that too.

The Fed has raised interest rates again, bond yields have moved higher, and oil prices remain elevated. Yet parts of the stock market are still holding up, with several forces pulling in different directions.

So we started by looking at what the Fed’s latest move could mean for T bills, fixed deposits and Singapore stocks, and where the opportunities may be shifting.

When the path ahead is less clear, I find it more useful to focus on what I want each part of my portfolio to do.

For money I may need sooner, we look at whether T bill yields could rise above 1.7% at the next auction. We also find out if the latest Singapore Savings Bond, with a 10 year average return of 2.32%, is worth applying for or waiting on.

For income, we compare DBS, OCBC and UOB with Singapore REITs, as REIT yields have risen above those offered by the banks. In our latest Beansprout Insights video, we also look at whether REIT yields are attractive enough after the Fed’s latest move.

And for the money I’m investing for the longer term, our latest podcast with Eastspring explores what financial independence really means. That naturally leads to the question of what we are ultimately building towards. In our latest retirement guide, we look at what it would really take to retire at 50 in Singapore.

The haze will clear eventually. Markets will too, even if we cannot see the whole path ahead today.

What gives me clarity is knowing what I’m investing for, rather than simply reacting to the latest headlines. For me, that means retiring with greater security, taking care of the people I love, and having more choices over how I spend my time. 

I hope this helps you find a little more clarity too. Happy growing!

Gerald, Founder of Beansprout

⏰ This Week In Markets

📊 Singapore stocks fell as Fed raised interest rates

What happened? 

The Federal Reserve raised interest rates by 25 basis points, bringing the federal funds target range to 3.75% to 4.00%.

While the move was widely expected, the Fed struck a firmer tone than some investors anticipated, maintaining its focus on inflation even as the US economy remains resilient.

With economic growth holding up, the Fed's latest projections also pointed to another 25 basis point hike by the end of 2026.

What does this mean?

The Fed's firmer stance pushed bond yields higher as investors adjusted to the prospect of interest rates staying elevated for longer. The 10 year Treasury yield briefly rose above 5%, its highest level since 2007.

Despite the rise in interest rates and bond yields, strong corporate earnings and continued investment in AI have helped to keep markets resilient. 

However, with interest rates staying elevated, energy prices remaining high and valuations stretched, market volatility could remain elevated.

What we are watching

Oil prices and Treasury yields remain key indicators to watch, especially after the 10 year Treasury yield briefly crossed 5%.

A further rise in oil prices could add to inflation pressures and strengthen expectations that interest rates will remain elevated for longer.

Investors will also be watching the Trump Xi meeting on 24 September, with trade, critical minerals and AI among the issues expected to be discussed. Markets will be looking for signs that the US China trade truce could be extended further.

Why should I care?

The S&P 500 fell 0.8% for the week, while the Nasdaq Composite rose 0.7%, with technology and AI related stocks continuing to find support.

In Singapore, the Straits Times Index fell 0.7% as investors became more mindful of valuations after the recent rally.

SIA's share price and SATS' share price came under pressure as Brent crude oil remained above US$100 per barrel, raising concerns about impact of higher fuel costs on air transport related stocks.

🚗  Moving This Week

• DBS is expanding its bullion vault capacity this year amid stronger demand from private wealth and institutional clients, driving momentum in Singapore’s push to become a major gold trading hub. OCBC and Deutsche Bank are also reportedly considering expanding their precious metals storage capacity in Singapore. Read more here
• OCBC has signed a new 10-year strategic cooperation agreement with Bank of Ningbo, in which it owns a 20% stake, to deepen cross-border business, trade, wealth and investment flows between Greater China and Asean. The partnership supported a 50% increase in new-to-bank Chinese companies expanding into Asean through OCBC in 2025, as China-Asean bilateral trade surpassed US$1 trillion for the first time. Read more here 
• City Developments Limited will announce the outcome of its strategic review before trading hours on Sep 28, after appointing global advisory firm Teneo to lead the process. The review is expected to include a concrete plan backed by asset and financial measures to reduce the group’s gearing. Read more here 
• StarHub upgraded its network to 5G+ on 1 September, using the 700 MHz spectrum to improve indoor and underground coverage.The upgrade makes StarHub the second telco after Singtel to offer mass-market plans on the low-frequency spectrum. Analysts expect it to help StarHub retain customers and defend market share, but not reverse the broader decline in Singapore mobile revenue. Read more here. 
• SBS Transit will replace GuocoLand in the iEdge Singapore Next 50 Indices following SGX’s latest quarterly review, with the change taking effect on 28 September. The index tracks the next 50 largest SGX-listed companies after the 30 constituents of the Straits Times Index, serving as a barometer for Singapore’s next tier of large-cap stocks. Learn more about the iEdge Singapore Next 50 Index here. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The Big Important Story

Fed raises interest rates: What it means for T-bills, fixed deposits and blue chip stocks

The Fed has raised rates by 25 basis points and signalled more tightening ahead. Here’s what higher-for-longer rates could mean for bonds, T-bills, SSBs, stocks and REITs.

🤓 What we're looking out for next week

Key dates

• Wednesday, 23 Sep: Singapore CPI (Aug)
• Thursday, 24 Sep: 6-month T-bill auction result, Trump-Xi meeting at the White House
• Friday, 25 Sep: Singapore Savings Bonds closing date

Get the full list of stocks with upcoming earnings and upcoming dividends. 

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