CSOP USD Money Market Fund Wrap-20240610

Last week’s economic data was mixed with most of the week indicating cooler labor market. However, last Friday, US jobs report came out strong, causing investors to reassess probability of future rate cuts.

Job openings decreased by 296k in April to 8.06 million, nearing the pre-pandemic ratio of job openings-to-unemployed ratio at 1.24, close to February 2020's 1.22. Initial jobless claims for the week ending June 1 increased by 8k to 229k, exceeding the consensus estimate of 220k, though this upside surprise could be a result of seasonal adjustments. ADP employment report indicated a slower growth pace with a 152k rise in private payrolls in May, below the expected 175k.

However, service surveys showed strength and return to expansion, with the May ISM services PMI survey reaching its highest point since June 2023 at 53.8 (vs 49.4 prior). The final manufacturing PMI for May increased to 51.3 (consensus: 50.9), while the ISM manufacturing PMI fell 0.5 points to 48.7 (consensus: 49.5), due to a significant decrease in new orders from lower demand.

On Friday, US jobs report came out robust with nonfarm payrolls rose to 272k (vs 189k estimates; 175k prior), thereby prompting a reassessment of potential Federal Reserve rate cuts and reducing fears of an economic slowdown. The robust labor market could maintain inflationary pressures, supporting the Fed's cautious approach.

Looking ahead, this week’s June FOMC meeting will be pivotal. Investors are awaiting this Wednesday's update on the Fed's interest rate forecasts. While the central bank is expected to maintain borrowing costs, the focus will be on the new economic projections.

Source: CSOP, Department of Labor, Bloomberg, as of 20240608. ^ 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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