CSOP USD Money Market Fund Wrap - 20221017

- The higher-than-expected CPI(headline 8.2% YoY vs. expected 8.1%) will make it difficult for the Fed to slow sown to a 50bps hike at its last meeting of the year.This implies that the Fed would raise rates by 150bps in aggerate in November and in December.

- Most major core items saw a robust rate of inflation growing a monthly pace of 0.8% - the fastest monthly gain since Aug 1990. This confirms some policy makers' fears, as indicated in minutes of the September FOMC meeting. Shelter costs continued to grow at the same robust 0.7% pace as August.

- Following the inflation report, the Fed swap now fully price 75bps hike in November.The rate on the November OIS contract rose to 3.86% (more than 75bps above the current effective fed funds rate). The market also prices in a higher eventual peak for the policy rate, with the March 2023 contract touching 4.864%.

Source: CSOP, Bureau of Labor Statistics, Bloomberg, as of 20221014. * Gross yield is based on annualized yield of underlying holdings. 7-day net yield is calculated based on calendar days and NAVs in full decimal.

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