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Hey fellow REITs and dividend investors! With all the drama surrounding the global markets recently — tariffs, volatile interest bond markets, and falling tech stocks — something quite significant has happened right here in Singapore… and it’s gone almost unnoticed.

The latest 1-year Singapore T-bill auction just closed at a yield of 2.29%. That’s the lowest level since 2022, and a whopping 66 basis points lower than just three months ago in January! Why do I say that this trend has gone unnoticed? Well, most people I know have practically left the T-bills market. Just a while back, when T-bills where yielding close to 4%, it was the talk of the town, or rather the topic you hear at the coffee shops – everyone’s into it. But now, that buzz among Uncles, Aunties and young adults alike has faded as yields fell below 3%.

Now, I know T-bill yields might not sound as exciting as Nvidia’s earnings or Tesla’s latest technological advancement, but for income investors like us — especially those holding REITs and dividend stocks — this quiet drop might be one of the most important trends to watch right now.

Today, I want to unpack what this means for Singapore investors, why Singapore T-bills and other Singapore government securities or SGS yields are dropping even as US Treasury yields stay high, and how this could be a turning point for income-generating assets.

Before we dive in, just a quick heads-up — the annual REITs Symposium 2025 is happening on 24 May at Suntec Convention Centre. To be clear, this is not a sponsored post — I just think it’s a useful event to hear directly from REIT managers and get fresh insights. The organisers have kindly offered complimentary passes for subscribers of this channel. I’ve placed the link in the comments section, so don’t miss out — grab your free pass while it’s still available. 

As usual, let me remind you that this post is for informational purposes only and not financial advice. Always do your own research and consult a licensed financial adviser before making any investment decisions. I own some of the REITs and shares discussed, but what works for me might not work for you.

Alright, let’s get started!

Singapore Government Yields Are Falling Across the Board!

Let’s start with the basics — it’s not just the 1-year T-bill yield that’s dropped. If you look at the bigger picture, Singapore’s 2-year, 5-year, and 10-year SGS yields have all been trending down over the past couple of months. 

This means that most Singapore Government Securities are now back to levels last seen in 2022. While we’re not yet at the ultra-low rates of 2021, before global central banks started raising interest rates aggressively, this is still a very encouraging shift for income investors — especially if the downward trend continues.

When bond yields fall across the curve like this — from short-term T-bills to longer-term 10-year notes — it signals a broad market expectation that rate pressures are easing. It suggests that the market is increasingly pricing in lower interest rates ahead. And that’s exactly the kind of environment that could breathe new life into REITs and dividend stocks.

Why SGS Yields Are Falling While US Yields Remain High

What’s even more interesting is this: US Treasury yields haven’t followed suit. In fact, the 10-year US Treasury yield recently spiked to 4.5%, thanks to inflation concerns and fears of foreign selling. The traditional relationship of Singapore interest rates falling in line with the US has broken down. So why are Singapore’s yields falling while US yields are rising?

Personally, I think there are a few big reasons why Singapore’s yields are falling while US yields remain stubbornly high:

1. Inflation in Singapore is falling.

Unlike the US, where tariff announcements are raising inflation fears again, Singapore’s inflation numbers have been steadily easing. This allows MAS and market participants to be more relaxed about interest rates.

2. Singapore’s fiscal discipline is strong.

Investors know that Singapore doesn’t print money recklessly. We run consistent surpluses or balanced budgets, and that creates strong trust in Singapore bonds, especially during uncertain global times. Conversely in the US, the budget deficits have been rising year after year, with little signs of improvements. 

3. Risk aversion and “flight to quality.”

Amid all the global volatility, there’s a lot of demand for safe, high-quality assets — and while US Treasuries are usually the first choice, the recent “Sell America” trend, fear of foreign selling, and hedge fund deleveraging have made some investors cautious. Singapore Government Securities are increasingly seen as a regional safe haven, and this increased demand drives yields down. 

I’ve talked about these trends in greater details in my previous post – do take a look if you’re interested. 

But in short: Singapore’s economy is stable, inflation is under control, and our bonds are trusted. That’s why we’re seeing this quiet but important yield compression — and for income investors, it’s potentially very good news, especially if the trend continues.

Why Falling Yields Are Good for REITs and Dividend Stocks

Now, if you’re wondering why this is relevant for REITs and dividend investors, then this section is for you. 

When government bond yields fall, income investors start looking elsewhere for returns — especially to dividend stocks and REITs.
Falling yields also reduce borrowing costs, especially for REITs that have upcoming debt refinancing. Conversely, the higher interest rates that REITs have to pay for their borrowings is one major factor pushing prices down over the past few years. 

And psychologically, lower risk-free rates re-price what’s considered “attractive” income. A REIT yielding 5.5% looked only mildly interesting when T-bills were yielding 4%. But now that T-bills are back to 2.29%? That REIT suddenly looks a lot more attractive for the same additional risk taken up by the investor.

So this recent drop in SGS yields — back to levels last seen two years ago — could signal that the worst of the rate-driven REIT pain might be behind us.

Not All REITs Benefit Equally – Focus on Those with SGD Debt

But before we get too excited, let’s be clear — not all REITs will benefit equally from falling Singapore yields. As viewers of ‘The Dividend Uncle’, you would already know that! 

Well, the focus on this trend should be on REITs that are heavily geared in SGD — i.e. they borrow mostly in Singapore dollars — will benefit the most. These REITs will be those with most of their property assets in Singapore, and they will see lower interest expenses as they refinance debt or roll over loans in this lower-rate environment.

So which REITs should we watch? CapitaLand Integrated Commercial Trust (or CICT) – with a strong Singapore portfolio and SGD debt exposure. Frasers Centrepoint Trust (or FCT) – 100% Singapore exposure, and a suburban mall portfolio that is defensive. CapitaLand Ascendas REIT (or CLAR) – diversified, but with significant Singapore operations. And Far East Hospitality Trust (or FEHT) – still consisting largely of Singapore hospitality properties and SGD borrowings.

These REITs are better positioned to benefit from falling local yields, compared to REITs with heavy US exposure or USD debt, like Prime US REIT or Keppel Pacific Oak US REIT. Again, these are examples of REITs I’m watching based on my own approach — definitely not a recommendation.

But… Could Falling Yields Be a Warning Sign for the Economy?

Now, while I’ve been saying lower yields are good news for REITs and dividend stocks — and they are — we also have to be honest with ourselves. Falling government bond yields don’t always mean everything is getting better. Sometimes, it’s the market’s way of telling us that the economy might be slowing down.

Think about it this way — investors usually demand lower yields from bonds when they expect inflation to fall or growth to weaken. So if yields are dropping across the board, like we’re seeing in the 1-year to 10-year Singapore Government Securities right now, it might also reflect cautious sentiment about the economic outlook.

Could it be a sign that Singapore’s economy is softening? That global growth is under pressure from trade tensions and uncertainties is leading to tighter credit conditions? These are real questions. And they matter — especially for REITs that are more sensitive to consumer spending or travel trends.

For example, retail REITs like C.I.C.T. might benefit from lower borrowing costs, but if shoppers pull back or tourism weakens, tenant sales could suffer. Hospitality REITs too — they’ve done well on the back of travel recovery, but a slowdown in regional demand could impact room rates and occupancy for F.E.H.T..

Before you start scolding this uncle, let me be clear – I’m not sounding the alarm here — Singapore is still in a relatively strong position globally. But it’s worth keeping this in mind. Falling yields may be easing the financial pressure on REITs, but they could also be a reflection of deeper economic shifts. As always, we need to stay balanced — and watch how both the financial and real economy evolve in the months ahead.

The Dividend Uncle’s Take – Quiet Shifts, Big Implications

Sometimes the most important changes in the market don’t come with big headlines — they happen quietly in the background.

That’s what I think we’re seeing now with Singapore’s falling bond yields. While everyone’s glued to US Treasury volatility and political headlines, the 1-year T-bill in Singapore has quietly dropped to a 2-year low. That could mark a turning point for income investors who’ve been patiently holding on.

This drop in SGS yields is a positive sign, but we’re still living in uncertain times. I’m still staying cautious… but I’ll admit, I’m giving a small nod to fellow REIT investors — maybe, just maybe, the worst could be behind us.

But as usual, what matters most is staying invested in quality, managing risk, and being ready to take advantage of opportunities when they come.

Alright, that’s all for today! If you found this update useful, let me know in the comments what you think of the latest T-bill results. Are you adding more REITs or still sitting on the sidelines? To me, there is nothing better than interacting with you, my valued viewers! 

Until next time, stay steady and invest wisely.