· The most significant development last week was the Fed’s first rate cut in over four years, where it cut rates by 50bps. It was followed by projections suggesting a slim majority favoring an additional 50 basis points of cuts in the remaining two policy meetings this year, despite market expectations of a more aggressive 70 basis points reduction. Fed Chair Powell warned against expecting continued large rate cuts. The median projections from officials' updated quarterly forecasts indicate a further half-point reduction by year-end, with median forecasts for the end of 2025 and 2026 at 3.375% and 2.875% respectively.
· Retail sales in August slightly increased 0.1% (consensus: -0.2%), and the key control series was up 0.3%, in line with consensus. Given that back-to-school shopping historically increases August retail sales, this year’s data indicate that consumers are becoming more budget conscious, and purchases are leaning towards discounted goods. Given weakening job and income fundamentals, there is minimal upside potential in retail sales in the next few months.
· Week ending September 14 saw greater-than-anticipated decrease in initial jobless claims, which fell by 12k to 219k, bringing the four-week average to its lowest since early June. Despite this report coinciding with the payroll survey week, JPM economists are hesitant to interpret it as a sign of payroll growth due to ongoing seasonal adjustments and a recent trend of slower job increases.
· While yields will fall along with Fed rate cut, we expect CSOPUMM to continue to deliver stable yield in the near term. As of 20240920, the fund has gross yield of 5.31% and net yield at 5.06%. ^
Source: CSOP, Bloomberg, JP Morgan as of 20240920. ^ 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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“The investment product(s), as mentioned in this document, is/are registered under section 286 of the Securities and Futures Act (Cap. 289) of Singapore (the “SFA”).This material and the information contained in this material shall not be regarded as an offer or solicitation of business in any jurisdiction to any person to whom it is unlawful to offer or solicit business in such jurisdictions. This document is not to be construed as recommendations to buy/sell any above-mentioned securities, or any securities in the above-mentioned sectors or jurisdictions.
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Advice should be sought from a financial adviser regarding the suitability of the investment and/or investment product before making an investment. Investment involves risk. The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not necessarily indicative of future performance. Investor should read the prospectus and product highlights sheet, which can be obtained on CSOP website or authorized participating dealers, before deciding whether to invest. This document has not been reviewed by the Monetary Authority of Singapore.”
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