Last week, disappointing domestic data fueled speculation of a potential Fed rate cut this year to curb further economic slowdown.
Conference Board’s headline consumer confidence index fell to 100.4 in June (vs downwardly revised 101.3 prior), mainly driven by weakening expectations of future income and business conditions.
While initial jobless claims fell slightly to 233k for week ending 22nd June (vs upwardly revised 239k prior), continuing jobless claims rose to 1.84m for week ending 15th June, possibly exacerbating unemployment, thereby indicating a looser labor market.
Furthermore, US core capital goods order, an indicator for investment in equipment excluding aircraft and military hardware, experienced the largest drop YTD in May. Core capital goods shipments, an indicator for equipment investment, fell 0.5%, the most in 3 months.
Additionally, May’s monthly core PCE inflation reading was at the slowest yet this year at 0.1% m/m (vs 0.2% m/m prior).
However, it is crucial to note that healthcare cost inflation is slow-moving and sticky and could stall disinflation moving forward, meaning faster cooling of labor market would be needed before Fed cut rates.
We expect CSOPUMM to continue to deliver stable yield in the near term. As of 20240628, the fund has gross yield of 5.57% and net yield at 5.21%. ^
Source: CSOP, Department of Labor, Bloomberg, as of 20240628. ^ 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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