CSOP USD Money Market Fund – 20241004

- Last week, consumer spending in August rose by 0.1% m/m, suggesting robust Q3 growth, easing fears of a spending cut due to a low personal saving rate.

- Core PCE deflator rose to 2.7% y/y in August, implying that inflation is moving towards the Fed's 2% target. This leaves room for the Fed to make another significant cut if the September payrolls report is disappointing.

- Regarding labor markets, strong ADP employment report, with a rise of 143k in private payrolls for September (surpassing consensus of 125k), the highest monthly increase since June, and slight rise in initial claims to 225k (consensus: 221k), which remains lower than early September levels, indicates resilient labor markets.

- Furthermore, ISM services index for September increased to its highest to 54.9 (consensus: 51.7) since February 2023, although the employment component fell to 48.1, which is in line with rise in initial jobless claims in the corresponding period.

- Besides that, it is to note that the escalating Middle East war could raise oil prices. Bloomberg Intelligence estimates that oil prices may hit $100/barrel, up from ~$74/barrel at time of writing. This would contribute add ~0.6% to global inflation and~ 0.7% to US inflation, thereby making it challenging to go ahead with rapid rate cuts.

- Nevertheless, we expect CSOPUMM to continue to deliver stable yield in the near term. As of 20241004, the fund has net yield at 4.91%. ^

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