Although there has been little “pass-through” from heightened US rates since early 2025, three-month compounded Sora appears to have found a floor at 1.02% in late April and has since moved to 1.08% as of June 19. In addition, the yield of the 10-year Singapore government bond rebounded from 1.91% in mid-Feb to 2.06% as of June 19. REITs' unit prices depend on the difference between their DPU yields and risk-free rates.
At new Fed Chair Kevin Warsh's first Federal Open Market Committee (FOMC) meeting on June 16-17, the Federal Reserve’s Fed Funds Target Rate (FFTR) remained at 3.50%–3.75% as widely expected, with a unanimous vote (12-0). However, the dot plot pointed to nine officials penciling in at least one rate hike this year, eight expecting no change, and one expecting a rate cut. The betting markets (Polymarket and Kalshi) have 77% (of the betters) expecting no rate cuts before 2027.
A report by UOB Global Economics and Markets Research points to an extended pause in 2026, followed by a resumption of easing in 2027. “We note rising risks of rate hikes with inflation data and geopolitical developments key to shaping future expectations,” the report says.
