Rising interest rates — which are usually felt through bond yields first — are being blamed on inflationary pressures.
REITs and rates have a love-hate relationship. What is clear, however, is that the rate tightening cycle has begun. The US Federal Reserve (Fed) has already articulated at least three rate hikes — possibly even four — in the Fed Funds Rate this year.
Risk free rates, which are the 10-year US Treasury yields and yields of 10-year Singapore Government Securities locally, are rising as evidenced by the chart below. Against this background of rising rates, the FTSE ST REIT Index — something of an outperformer in 2021 — is falling as per the chart below.
