To The Moon

• Last week’s FOMC meeting saw rates being held constant, with 2024 projections indicating a single cut and Chair Powell's stance being less dovish than recent meetings. The median 2024 projection showed one cut for this year, down from three in March. However, projections for 2025 and 2026 each indicate four cuts, up from three in March, maintaining a total of nine cuts over the next two and a half years, but with a delayed start and quicker catch-up after year-end.

• This is despite lower-than-expected May CPI where monthly increase in core CPI was 0.16% (expected: 0.3%), the lowest since August 2021, reducing the year-on-year rate from 3.6% to 3.4%. Headline PPI also dropped 0.2% in May (consensus: 0.1%), and the core index remained constant (consensus: 0.3%).

• Initial jobless claims unexpectedly increased by 13k to 242k (consensus: 225k) for the week ending June 8, the highest since August 2023. However, JPM economists warn this could be due to noise post the Memorial Day holiday.

• Weaker-than-forecasted May CPI and PPI data supports the view that PCE is probably going to lower to 2.6% in May, but it is crucial to be mindful that healthcare costs have more catch-up inflation to go, and healthcare is the largest weight in the PCE. Given healthcare cost inflation is slow and very sticky, core PCE might go back up in 2H24 and inflation might not be the reason for Fed cuts.

• Thus, if Fed is to cut in future, it would be probably be due to cooling labor market.

• We expect CSOPUMM to continue to deliver stable yield in the near term. As of 20240614, the fund has gross yield of 5.56% and net yield at 5.18%. ^

Source: CSOP, Department of Labor, Bloomberg, as of 20240614. ^ 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. For illustration purpose only. Not to be construed as recommendation to buy/sell securities in the above-mentioned sectors.

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CSOP Asset Management Pte. Ltd. (“CSOP”) which prepared this document believes that information in this document is based upon sources that are believed to be accurate, complete, and reliable. However, CSOP does not warrant the accuracy and completeness of the information, and shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. CSOP is under no obligation to keep the information up-to-date. The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract. The information herein shall not be disclosed, used or disseminated, in whole or part, and shall not be reproduced, copied or made available to others without the written consent of CSOP.

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.”