Higher bond yields and oil prices cut 1.8% off STI, sending it below 5,700

Date: September 14, 2026

• The STI fell below 5,700, down 1.8%
• Oil prices rose above US$100 a barrel on renewed US-Iran fighting
• Latest US inflation data sparked rise in bond yields, 87% chance of rate hike this week
• Bidders Pounced on US 10-Year Notes as Auction Achieved Highest Yield Since 2007
• European shares closed at two-month low as ECB hike fuelled further tightening bets
• DBS ‘categorically rejects’ S$1.3 billion claim by 1MDB-linked entities under liquidation, said no provisions needed
• SGX securities trading value climbed 35% on year in August on retail buying, STI rally
• Citi initiated coverage on CSE Global with ‘buy’, S$1.70 target price

 

Higher oil, bond yields sent STI tumbling below 5,700

The Straits Times Index lost its grip on the 5,800 and 5,700 level last week, losing about 106 points or 1.8% at 5,695.93 in response to rising oil prices and US Treasury yields.

The index fell every day from Monday to Thursday before recovering slightly on Friday. However, average daily volume was a relatively low S$1.7b compared to the S$2b-plus averages of a few weeks earlier.

 

Oil prices rose above US$100 a barrel on renewed US-Iran fighting

Brent oil futures traded above US$101 per barrel while WTI futures topped US$96 a barrel on Wednesday. Oil prices hadn’t climbed this high in months.

The 10-year yield sat over 4.8%, its highest level since 2023.

On Thursday the 30-year yield settled at 5.36%, its highest level since 2004. Oil prices continued to rise with Brent futures passing US$107 per barrel and WTI futures hitting US$102 a barrel.

Both higher energy prices and bond yields add to the inflationary pressures weighing on equities. Higher energy prices translate into higher costs while higher yields mean higher borrowing costs, both hurdles for companies as well as consumers.

Josh Chastant, an investment analyst at GuideStone, says the market needs a sense of easing on the inflationary front. Especially as investors focus on macro forces in the lull between earnings.

“Iran has stated they are ready for a more intense war and President Trump stated the conflict will last into the mid-term elections, which now has solidified the fact that tighter supplies are being priced in for the foreseeable future,” Dennis Kissler of BOK Financial said in a note.

 

Latest US inflation data sparks rise in bond yields, 87% chance of rate hike this week

Friday’s latest inflation data looked to be hot enough to push the Fed to raise interest rates at its policy meeting this week.

The Bureau of Labor Statistics reported that headline inflation did not cool in August, with price growth rising 0.4% on the month and keeping annual growth at 3.4%—the same pace as July.

Core CPI rose 0.3% on the month, a bit stronger than anticipated. Compared to a year ago, core inflation rose 2.4%, a bit of a deceleration from July’s 2.5% rate.

The odds of a rate hike jumped to 87% in the hour after Friday’s data release, according to CME FedWatch. That’s up from a 73% probability the day before and just 60% a week ago.

Yields on the 2-year Treasury note also supported a rate increase on Friday, shooting up to 4.613%. That’s a new 52-week high and signals the market is more certain that the Fed will raise rates at the conclusion of the Federal Open Market Committee’s meeting on Sept. 16.

The 10-year yield climbed nearly 20 basis points to 4.97%.

For the week, the blue-chip Dow Jones Industrial Average fell 1.57%, the benchmark S&P 500 lost 0.80%, and the tech-heavy Nasdaq Composite handed back 0.66%

 

Bidders Pounced on 10-Year Notes as Auction Achieved Highest Yield Since 2007

Investors pounced on rising rates, buying 10-year Treasury notes at the highest yield achieved at an auction in 19 years.

Investors absorbed US$39 billion worth of 10-year notes auctioned on Wednesday. While the yield achieved was 4.834%, the highest level at any 10-year auction since August 2007, this was a reflection of ongoing market dynamics.

The bid/cover ratio was 2.71, meaning US$2.71 in bids were received for every US$1 of debt on offer, which is stronger than the average ratio of 2.52 for similar auctions.

Yields on longer-duration bonds have been rising thanks to strong economic growth, inflation fears, and growing borrowing needs from the U.S. government.

While Treasury Secretary Scott Bessent has endeavoured to keep yields in check by repurchasing longer-dated bonds, an earlier boost in the amount of repurchases to US$6 billion was smaller than expected, sending yields higher.

 

European shares closed at two-month low as ECB hike fuels further tightening bets

European shares fell to two-month lows on Thursday as expectations of further interest rate hikes grew after the European Central Bank increased borrowing costs and warned of higher inflation due to a war-driven energy shock.

The pan-European Stoxx 600 was down 0.7% at 635.97 points, its lowest level since July 8. Most major regional markets also traded in the red.

The ECB raised interest rates by 25 basis points to 2.5% on Thursday, its second increase this year, as policymakers sought to ensure a rise in energy prices stemming from the Iran war does not spread through the euro zone economy, which is particularly vulnerable to the shock due to its dependence on fuel imports.

“Inflation risks may be rising and a further hike in December may be more likely than not, but the ECB still needs to tread carefully,” Mark Wall, Deutsche Bank’s chief European economist, said.

“The economy has been resilient over the last six months, but rapidly rising gas prices mean the negative supply shock is building. It will eventually hurt growth.”

 

DBS ‘categorically rejects’ S$1.3 billion claim by 1MDB-linked entities under liquidation, says no provisions needed

DBS “categorically rejects” a S$1.298 billion claim for damages in a lawsuit filed by several entities linked to the 1Malaysia Development Berhad (1MDB) scandal.

The bank on Wed said that a lawsuit has been filed against the bank by four entities under liquidation and the companies’ liquidators, Jason Aleksander Kardachi and Karnjote Singh S/O Jarmal Singh.

DBS said it “has consulted its legal advisers, and categorically rejects and will vigorously resist the claim”.

“It is a matter of public record that there have been global recovery efforts relating to 1MDB, supported by legal counsel since 2018. All this time, there was no claim against DBS,” it added.

DBS has also “assessed that no provisions are required at this stage”.

The development comes as several other 1MDB-linked entities are involved in a US$2.7b lawsuit against Standard Chartered Bank. In June, the High Court dismissed StanChart’s appeal to strike out the lawsuit.

1MDB was a former Malaysian investment fund embroiled in a multi-billion dollar scandal under former Prime Minister Najib Razak. The Malaysian government has to pay US$2.18b in remaining debts incurred in the scandal, its deputy finance minister said in July.

 

SGX securities trading value climbs 35% on year in August on retail buying, STI rally

The securities daily average value (SDAV) on the Singapore Exchange (SGX) jumped 35% year on year in August to S$2.2 billion, driven by robust retail interest in real estate investment trusts (Reits) and the small to mid-cap stocks, alongside a record-breaking rally in the Straits Times Index (STI).

The total securities market turnover for the month rose 29% year on year to S$43.3 billion whilst on a month-on-month basis, SDAV grew 8% in August.

Retail investors actively bought price dips during the month, their participation expanding 22% month on month in Reits, and by 11%  in small and mid-cap counters.

The STI continued its upward momentum, setting successive record highs in August. It closed the month at a high of 5,755.36, up 35% from the year before, outperforming the rest of its regional Asean peers on a year-to-date basis.

The turnover in STI constituents climbed 44% year on year to S$1.5 billion, boosted by both institutional and retail flows, SGX said.

 

Citi initiates coverage on CSE Global with ‘buy’, S$1.70 target price

Citi has initiated coverage on systems integrator CSE Global, pointing to upcoming margin improvements and its Amazon data centre contract as upside drivers.

“With the bulk of revenues and order book generated outside Singapore, CSE stands out as a global champion in the small to mid-cap space,” said Citi analyst Luis Hilado on Wed.

He set a S$1.70 price target and assigned it a “buy”, though he cautioned that the stock had a “high risk” as well. Shares of CSE Global closed flat at S$1.18 on Wednesday but rose on Thursday and Friday to S$1.25.

The company’s largest revenue exposure – about 53% by the end of the 2026 financial year – comes from electrification, said Hilado in a note. This is set to grow further given the potential US$1.5 billion data centre electrification project pipeline from Amazon alone.

With CSE aiming to build further relationships with other hyperscalers, Citi expects room for further pipeline growth and forecasts a two-year revenue and earnings per share compound annual growth rate of 15 and 22%, respectively.

Margins are also expected to improve to 9.8% in 2027 for CSE, with startup costs for its Champion facility in the US having weighed on its first-half results.