After hitting a low of 614 in October last year, the REIT Index has been moving in a wide range, re-testing the October low in April this year with a low of 624 and again in June at 628. These tests are likely to establish support at the 614 to 624 range. With a breakout of 650 during the week of July 8–12, the REIT Index is likely to head towards 720–730. An important resistance level is at the twice-tested 733 level.
Technically, the 10-year US Treasury yield has fallen below the 4.20%–4.22% range, ending at 4.16% on July 17. The 10-year yield on Singapore Government Securities (SGS) fell below 3% on July 17 to end at 2.97% for the first time since February. On average, the SGS 10-year yield remained above 3% this year.
The relationship between the FTSE REIT Index and the 10-year Treasury and SGS yields (often viewed as risk-free rates) has been inversely proportional for the past three years. As yields rose, the REIT Index fell. Whether the S-REIT index rises as yields fall remains to be seen, but the probability is high.
