Fed Delays Rate Cuts to September

The Fed delays rate cuts to September 2024. On Tuesday, Federal Reserve Chair Jerome Powell said that there was a lack of further progress on inflation. This means that the central bank will likely NOT cut interest rates at its upcoming policy meeting which is two weeks away.

The US and Singapore stock market tumbled upon the news that the Fed will most likely delay rate cuts from May to September 2024. Let us take a look at the recent inflation data below.

Inflation Rate US March 2024

As you can see from the chart above (taken from the U.S Bureau of Labor Statistics), the inflation rate in US accelerated for a second straight month to 3.5% in March 2024 from 3.2% in February 2024. In fact, inflation in US was on an uptrend since January 2024, the beginning of the year.

The latest retail sales report shows that consumers in US continued to spend last month. Who doesn’t love shopping?

Crisis or Opportunity?

REITs are impacted the most when interest rates remain high. With such negative news, most REITs will tumble because it will mean the high financial costs will continue to erode its distributable income. In summary, lower Distribution Per Unit (DPU) is expected.

Below are the REITs that I may increase my position in my stock portfolio.

Mapletree Pan Asia Commercial Trust Share Price (SGX:N2IU)

Based on MPACT’s closing share price of S$1.22 and FY22/23 full year distribution of 9.61 cents, this translates to a current dividend yield of 7.88%.

MPACT Share Price 17-Apr-2024

Mapletree Logistics Trust Share Price (SGX:M44U)

Based on Mapletree Logistics Trust’s share price of S$1.37 and FY22/23 full year distribution of 9.011, the current dividend yield is 6.58%.

Mapletree Logistics Trust Share Price 17-Apr-2024

Keppel DC REIT Share Price (SGX:AJBU)

Based on Keppel DC REIT’s closing share price of S$1.66 and FY23 full year DPU of 9.383 cents, this translate to a current dividend yield of 5.65%.

Keppel DC REIT Share Price 17-Apr-2024

Fed Delays Rate Cuts to September

As a dividend investor, I take this as an opportunity for me to add more dividend yielding stocks such as REITs to my stock portfolio. I believe interest rates will not remain high forever. We just have to keep calm and wait for the catalyst (rate cut) to come in the upcoming months and see the prices rally again.

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