S-Reits: taper tantrums no more

IT used to be in the last few years that the expectation of an increase in the benchmark interest rate by the US Federal Reserve would whipsaw equity markets into a frenzy, particularly for rate-sensitive instruments such as bonds and real estate investment trusts (Reits).

That has stopped happening in the recent rounds of rate hikes. After the Fed raised its benchmark interest rate by a quarter point to 1-1.25 per cent last Wednesday, Singapore Reit (S-Reit) prices barely moved. And local bonds actually rallied, while key interest rates in Singapore fell.

It seemed like the market simply shrugged off the news. This stands in contrast to the "taper tantrum" four years ago.