Lion-phillip S-Reit

$FTSE ST All-Share Index - Real Estate REITs(FSTRE.SG)$CSOP iEdge SREIT ETF S(SRT.SG)$Lion-phillip S-Reit(CLR.SG)$Amova-StraitsTrdg Asia REIT(CFA.SG)

The May PCE data is going to be released today (25 Jun 2026). According to morningstar, the annual rate of PCE inflation is forecast to be 4.1% (from April 3.8%), the highest level since April 2023. However economists expect this reading to be the peak for 2026 as lower low prices and easing tariff effects might curb price pressure in the coming months.

Given that inflation is well over the Fed's 2% target, then why are REITs showing strength these few sessions?

The answer may be market positioning rather than fundamentals.

1) Yields Are Driving the Trade

REITs are responding more to the recent easing in US 10Y yields than to the absolute inflation level; market trading rates direction, not inflation level

> Lower yields improve the relative appeal of REIT distributions.

2) “Peak Inflation” Positioning

Markets already expect a warm PCE print.

Investors may be betting that inflation is near a short-term peak, not accelerating further.

3) Geopolitical Relief

US–Iran talks reduce immediate fear of a prolonged Strait of Hormuz / oil shock.

Lower oil-risk premium helps bond yields and REIT sentiment.

4) Defensive Yield Rotation

In uncertain markets, investors often rotate into stable-income assets.

> Quality REITs with visible DPU, stronger balance sheets, and defensive assets benefit most.

5) Event Positioning Before PCE

Some buying may reflect defensive positioning before a binary inflation event.

> This does not necessarily mean investors are ignoring inflation risk.

6) Key Risk

A hotter-than-expected PCE print could push yields higher and trigger a REIT pullback.

Bottom Line

REIT strength today reflects lower bond yields + peak-inflation hopes + defensive rotation.

The rally remains fragile until PCE confirms or rejects that view.

Wondering how we could position ourselves? Do see the scenario table below.