- Tame inflation despite the reciprocal tariffs and nascent signs of weakness in the job market has led to expectations of two rate cuts in 4Q25.
- Maintain OVERWEIGHT on S-REITs. Our preferred BUYs are CapitaLand Integrated Commercial Trust, Frasers Centrepoint Trust and Lendlease REIT for suburban retail, and Digital Core REIT and Keppel DC REIT for data centre, which are less affected by the reciprocal tariffs.
- - Read this at SGinvestors.io -
Positive surprise from mild inflation.
- Core CPI, excluding food and energy prices, was stable at 2.8% y-o-y in May 25. Similarly, core PCE inflation was mild at 2.5% y-o-y in Apr 25.
- Inflation appears to be tame in 2Q25 despite negative impact from the reciprocal tariffs. Prices for apparels and new vehicles, which were affected by reciprocal tariffs, fell 0.4% and 0.3% m-o-m respectively on a seasonally adjusted basis in May 25. Retailers were unable to pass on price increases, as demand was subdued.
- Services prices, which were stubbornly low due to lower housing costs and air ticket prices, have also contributed to mild inflation.
Temporary bump in inflation seen as transitory.
- Read more at SGinvestors.io.
