Weekly Buzz: The Fed delivers its first rate cut of 2025

5 minute read

The US Federal Reserve (Fed) just delivered its first interest rate cut of the year, lowering the federal funds rate by 0.25 percentage points to a range of 4–4.25%. Markets mostly saw this coming: traders had been pricing in a September cut for weeks.

The latest readings on the US economy all but confirmed it. US core inflation – which excludes food and energy costs – matched predictions, rising 3.1% from last August. There’s also little evidence of a tariff-fueled spike that investors had been worrying about. At the same time, weekly unemployment claims in the US hit 263,000. That’s well above estimates, confirming weakness in the US jobs market.

The Fed also made it clear it’s ready to keep cutting if the data supports it. A stuttering economy could call for bigger and faster trims. Alternatively, if the economy accelerates, the central bank might pause. Rate cuts typically benefit risk assets like stocks, as cheaper borrowing costs boost economic activity. Traders now expect two more quarter-point reductions before the year is out.

Investor’s Corner: Global investors eye Singapore as rates fall

After years of "higher-for-longer" talk, global markets are now bracing for more rate cuts. Trillions of dollars flooded into money market funds and cash equivalents when interest rates peaked after 2022's inflation crisis, and that pile of yield-seeking money is about to face a major test. Where do you find reliable income when cash stops paying?

Finding income in Singapore

Real estate investment trusts (REITs) are one option that’s close to home. These companies own and manage income-producing properties, and they distribute around 90% of their income as dividends. Think of them as dividend machines backed by brick and mortar.

Supported by falling local interest rates and growing expectations of US interest rate cuts, yields for Singapore REITs are sitting around 5%, well above their historical averages. As our recent CIO Insights: Good Yield Hunting notes, REITs as an equity class provide both income and growth potential.

Meanwhile, Singapore’s government bonds are having their own moment. A recent 2030 auction drew the highest demand in a year, with investors piling into what’s increasingly seen as a safe-haven alternative to US assets. Singapore bonds saw roughly 16.6% total returns this year – the highest in Asia after Thailand.

Singapore’s AAA credit rating and fiscal surplus make these bonds particularly appealing when global uncertainty prevails, and this fiscal discipline extends across the region: debt-to-GDP ratios stand at roughly 55% in South Korea, 60% in Thailand, and 70% in Malaysia.

What does this mean for you?

Parking your money in savings accounts and short-term deposits won't deliver the same returns in a lower-rate world. As rates fall, cash becomes a slow leak against inflation. To keep income flowing, you'll need to diversify across assets that offer both stability and growth. The bigger lesson is timeless: yield matters, but so do risk and long-term growth, and the most resilient portfolios balance these trade-offs.

(For a portfolio that captures Singapore's opportunities for yield, check out Singapore Investing.)