Finally, some good news for DBS?

SINGAPORE (Nov 24): RHB is maintaining its “buy” recommendation for DBS Group, and raised its target price from $17.30 to $18.38, as market watchers become increasingly certain that the US Federal Reserve will raise interest rates in December.

The US presidential elections in early Nov led to rising yields on sovereign bonds. US 10-year Treasury yields rose from 1.826% at end Oct to the current 2.313%, and Singapore 10-year government bond yields followed suit, by rising from 1.887% at end-Oct to 2.297%.

RHB’s analyst Leng Seng Choon opines that the US Federal Reserve could very likely raise interest rates in December and continue raising them in 2017. The Singapore Interbank Offered Rate (SIBOR) has historically had a positive correlation with US Fed funds rate and could be set to increase alongside it.

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