Happy New Year! As we move into the first quarter of 2026, global markets remain characterized by elevated macroeconomic and geopolitical risk. Although seasonal holiday spending provided temporary support in December, underlying economic indicators continue to signal fragility. Ongoing geopolitical conflicts and heightened regional tensions are contributing to supply chain disruptions, increased energy and commodity price volatility, and constrained cross-border trade flows. These factors, combined with tightening financial conditions and policy uncertainty, are sustaining cautious investor positioning and reinforcing downside risks to near-term growth expectations.
The Federal Reserve on 10 December 2025 has cut the funds rate to a range of 3.50% to 3.75%, a decision that aligned with market expectations of a hawkish rate cut. While the adjustment signalled a modest easing in policy, accompanying communications emphasized caution regarding the future policy path. Notably, the decision drew dissent from three Federal Open Market Committee (FOMC) members, the first instance of multiple dissents since September 2019, highlighting internal concerns about the balance between inflation risks and labour market conditions.
The updated Summary of Economic Projections, particularly the closely monitored “dot plot,” continued to indicate a gradual policy normalization, with officials projecting only one additional rate cut in 2026 and another in 2027, bringing the federal funds rate toward its estimated longer-run neutral level of approximately 3%. Although these projections were unchanged from the September release, the dispersion of the dots underscored persistent divergence among policymakers regarding the appropriate trajectory of interest rates.
Website: Divided Fed approves third rate cut this year, sees slower pace ahead
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only. It does not take into account your individual needs, investment objectives and specific financial circumstances.
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Singapore Savings Bond
The Singapore Savings Bond (“SSB”) for February 2026 issuance has a 10-year average return of 2.25%. As the SSB is backed by the Singapore Government and has a credit rating of AAA, for now this is one of the safest investments out there. Accounting for rounding and simplicity, 2.25% shall be applied as the risk-free rate for articles during this quarter.
Website: SBFEB26 GX26020S Bond Details
The December 2025 daily 10-year average yield rates from MAS e-service website is extracted as below for confirmation.
| December 2025 Date | 10-Year Yield |
|---|---|
| 1 | 2.13% |
| 2 | 2.15% |
| 3 | 2.12% |
| 4 | 2.12% |
| 5 | 2.14% |
| 8 | 2.16% |
| 9 | 2.23% |
| 10 | 2.24% |
| 11 | 2.29% |
| 12 | 2.32% |
| 15 | 2.29% |
| 16 | 2.29% |
| 17 | 2.31% |
| 18 | 2.31% |
| 19 | 2.30% |
| 22 | 2.32% |
| 23 | 2.31% |
| 24 | 2.31% |
| 26 | 2.31% |
| 29 | 2.30% |
| 30 | 2.26% |
| 31 | 2.22% |
| Average | 2.25% |
Summary
With an applied market risk premium of 2.50% and the risk-free rate of approximately 2.25%, this would translate to an expected dividend yield to increase to 4.75%.
It should be noted that securities offering yields materially in excess of 4.75% may be subject to heightened levels of credit, market, and business risk. Higher yields may reflect increased uncertainty regarding the issuer’s financial condition or future cash flow sustainability. Investors should not rely solely on dividend yield as an indicator of investment attractiveness and are encouraged to conduct a comprehensive assessment of the issuer’s fundamentals, including management quality, financial strength, and long-term business viability, prior to making any investment decision.
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Website: Reasonable Dividend Yield 2025Q4 – 4.25%
