Last Wednesday, at the FOMC meeting, the Fed kept rates constant at 5.25%-5.50% for the sixth consecutive meeting.
The dovish FOMC statement and less-hawkish-than-anticipated Powell’s Q&A emphasized that a rate hike is unlikely to be the next policy move. As predicted, the US Treasury maintained the coupon auction size while increasing TIPS sizes. The Treasury also announced no plans for cash management buybacks this quarter but initiated the liquidity support buyback program.
Last Thursday’s data release indicate GDP cooled in Q1 while employment cost increased by the most in a year (+4.7% q/q), a sign that inflation is persistent, supporting the Fed’s hawkish pivot to keep rates high for longer than expected.
Bond traders have shifted expectations for the first full Fed rate cut earlier by a month to November.
We expect CSOPUMM to continue to deliver stable yield in the near term. As of 20240503, the fund has net yield at 5.16%.
Source: CSOP, Bloomberg, as of 20240503. ^ 7-day net yield is calculated based on calendar days and NAVs in 5-decimal.
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