Additional Investment Into Mapletree Industrial Trust As It Hits Record 52 Weeks Low of S$2.21 Per Unit.

Mapletree Industrial Trust ("MIT") dropped to a day's low of S$2.21 per unit today (17th Oct 2022)- setting up a new 52 weeks low record. Forward distribution yield now hovers around 6.2%. I have purchased additional 2,500 units at S$2.24 per unit (totaling S$5.6K ) using my CPF OA investment account. This should leave sufficient headroom of another S$4.5K in CPF OA reserved for any dilutive effects from rights issue. Personally, I think that the essence of the current SREIT market blood bath is whether the US inflation is under control else borrowing rates hikes will be further extended by the Feds well into 2024 which I should elaborate further below:

1. US CPI Data confirmed another giant rate hike for early Nov'22.

The recent release of the US CPI inflationary data is still below expectation by the general market which leads to widespread panic that interest rate will continue to sky rocket and terminal borrowing rates maybe at 5.5% to 6..0% instead of the current 4.5% to 5.0% expectation. There are also many investors proclaiming that the stock market crash will only get worse. Is inflation uncontrollable and will inflation continue to rage?

2. US Inflation still uncontrollable?

I thought that there are good signs for Sep'22 with slowing increases and in fact, the energy component depicts oil price declining further in Sep'22 due to falling aggregate demand by consumers. So I am not sure why big ticket items like the US housing seems to be still on the rise in the recent CPI report, but according to Fortune on 3rd Oct 2022, US national home price declines are uncommon, but it does occur on occasion. It happened in the early 1980s, then again in the early 1990s, and most notably in the years following the 2008 housing crash. That said, sharp home price declines are incredibly rare: Only the Great Depression and the Great Recession saw nationwide home prices fall in the double-digits range. 

In short, prices of big ticket items like US housing should come down soon with the sky high interest rates that is killing the entire world economies. The Fed just engineered a perfect storm for a deep recession with their hawkish stance. Hence I do not see how the use of increasing interest rates as a tool for fighting inflation is sustainable going forward.  

Parting thoughts

I have rarely seen stocks and bonds being beaten to a pulp together but it seems the case for those who are holding on to these 2 different asset classes. I also thought that it is rather interesting that our Singapore new launch property prices can keep surging (absolutely gravity defying) despite the sharp rise in interest rates. Anyway, I thought that the US Feds will definitely need to stop their interest rate hike soon as market aggregate demand for goods and services are cooling off fast. We have already seen many layoff of staff by a number of major financial institutions and Tech companies which is spreading into other economic sectors.

(Note: This entry is more for my own internal reference since I do not record my CPF investment into StocksCafe).