- We expect the Fed Funds Rate to peak at 5.0% by mid-23 and remain at elevated levels in 2H23. Singapore government bond yields have receded, indicating that inflation and interest rates would eventually ease. We focus on S-REITs with resilient balance sheets to weather a protracted period of elevated interest rates.
- - Read this at SGinvestors.io -
- CapitaLand Ascendas REIT (SGX:A17U) – Target Price: S$3.27.
- Frasers Logistics & Commercial Trust (SGX:BUOU) – Target Price: S$1.56.
- Mapletree Industrial Trust (SGX:ME8U) – Target Price: S$3.30.
- - Read this at SGinvestors.io -
Higher terminal Fed Funds Rate.
- Fed chairman Jerome Powell has warned that the Fed has “some ways to go” in its efforts to tame inflation. He cautioned that the terminal level (peak) of interest rates could be higher than previously anticipated. The Fed raised the target for Fed Funds Rate by 50bp to 4.25% on 14 Dec 22. Based on the Fed’s dot plot, the median projection for Fed Funds Rate is 5.1% by end-23, an increase of 50bp compared to the previous survey conducted in Sep 22.
- We expect the Fed to hike 50bp on 1 Feb 23 and taper to a 25bp hike on 22 Mar 23. The Fed Funds Rate should reach a peak of 5.0% by mid-23 (previous: 4.5%) and remain at elevated levels in 2H23.
Inflation has eased for two consecutive months.
- Read more at SGinvestors.io.
Above is the excerpt from report by UOB Kay Hian Research.
Clients of UOB Kay Hian may be the first to access the full report in PDF @ https://www.utrade.com.sg/.
Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-01-09
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