IT'S text-book perfect economics. Signs of inflation in the US economy has sent bond yields rising and equities tumbling. Yet, many investors were caught flat-footed.

Like its Asian peers, Singapore shares tumbled on Monday, spooked by the Dow's 665-point plunge on Friday, its worst since January 2016. Wall Street was hit after the rise in January wages, the most since 2009, sparked expectations that wage inflation is finally picking up. It didn't help that the Fed said it now sees inflation reaching its 2 per cent target this year, leaving bond traders guessing if there will be three or four rate hikes pending.

But experts in Singapore appear more sanguine, if not relieved, about Monday's retracement from the heady heights of January.