CSOP USD Money Market Fund Wrap-20240603

•Last week, US 1Q24 real GDP growth was revised downwards from 1.6% to 1.3% saar, matching consensus predictions, while the core PCE QoQ was revised from 3.7% to 3.6%.

•Initial jobless claims also rose to 219k (vs 215k prior). Given that the latest Beige Book mentioned firms are retreating hiring expectations on weaker demand and uncertain macro environment, unemployment rate could increase.

•Core PCE deflator probably moderated in April to the slowest monthly pace this year driven by sharp drop in airfares.

•The slowdown in consumption and prices, coupled with the labor market slowdown, are strengthening the argument for the Fed to initiate rate cuts this year, though last mile inflation (due to major services categories depending on minimum-wage labor are feeling the effects of catch-up inflation growth), might make it hard to bring inflation back to Fed’s 2% target by next year.

Source: CSOP, Department of Labor, Bloomberg, as of 20240531. ^ Gross yield is based on annualized yield of underlying holdings. 7-day net yield is calculated based on calendar days and NAVs in 5-decimal.

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