The September CPI report revealed a 0.3% increase in the US core CPI (excluding food and energy costs) last month. As such, swap contracts increased the odds of another 25bp Fed hike to about 40% compared to around 30% on Wednesday. Moreover, it showcased imbalanced disinflation, with goods sector prices performing well while service sector disinflation has stalled. The Israel-Hamas conflict poses a significant risk of another Fed rate hike.
Initial jobless claims for week ended Oct 7 stayed at 209k, below estimates of 210k, and the latest Kansas City Fed Index indicated the labor market significantly cooled to be in line with FOMC’s 2% inflation goal. However, it is worth noting the United Auto Workers strike has already resulted in layoffs in some states, and further job cuts are predicted, resulting in expectations of a rise in unemployment rate to 3.9% in Oct.
Minutes of the September FOMC meeting show a more cautious outlook by the committee compared to the summary of economic projections. While upward revisions to the near-term growth forecast reflect optimism about a soft landing, the minutes reveal that the Fed is closely monitoring various risks.
We expect CSOPUMM$9096 to continue to deliver stable yield. As of 20231013, the fund has gross yield at 5.74%^ and net yield at 5.31%.
Source: CSOP, Bloomberg, as of 20231013. ^ 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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