- S-REITs to gain momentum as global yields retreat. Operational metrics demonstrate strength while financial position is stable. Our forecast of flattish FY24-25F DPU already adequately accounts for risks associated with elevated interest rates.
A taste of a rebound was seen in early Nov 2023
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- Since the pause on interest rates in the latest FOMC meeting during 30 Oct - 1 Nov 2023, the 2-year and 10-year US yields have declined by 0.4ppt and 0.3 ppts, and have stayed below peak rates. The yields are currently hovering around 5.0% to 4.6%, respectively.
Can the recent rebound last?
- Our DBS economists hold the view that the FED is likely done hiking with the next move a potential normalisation of interest rates, sometime in 2024. Since then, we have seen the markets pricing in a FED cut from June 2024, with cuts up to 100 ppts till end 2024. This would be positive for S-REITs overall.
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Rate pause is positive for interest rate sensitive sectors
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