To The Moon

§Last week, Trump won the presidential election, pushing yields to their highest since early July. OIS forwards are pricing in a less dovish path for Fed policy than JPM's revised forecast. Despite this suggesting a good opportunity to add duration, the momentum towards higher yields remains strong.

§Trump’s victory could lead to more expansionary fiscal policies in the future. He is likely to extend most of 2017’s Tax Cuts and Jobs Act and will raise some tariffs. As such, growth and inflation is postulated to be marginally higher in the near-term and fiscal debt-to-GDP ratio will continue to rise. While Trump’s trade policy is a wild card, it is unlikely to be a universal tariff hike, instead it will be staggered and will not be levied on goods where cost to US firms and consumers will be prohibitive.

§The FOMC meeting held no surprises as the Fed cut rates by 25 bps to 4.5-4.75%. The statement had minor changes, with no hawkish dissent and a long-term view of the labor market. The condition to start easing, greater confidence in lower inflation, was met earlier this year and is no longer referenced. Chair Powell downplayed these changes, and JPM's a Natural Language Processing (NLP) interpreted his remarks as slightly more dovish than in September.

§Despite the Fed rate cut, with Trump in power, there exists concerns of higher inflation in future, which could impact the rates trajectory. We expect CSOPUMM to continue to deliver stable yield in the near term. As of 20241108, the fund has gross yield of 5.03% and net yield at 4.70%. ^

Source: CSOP, Bloomberg, JP Morgan as of 20241108. ^ 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.

Disclaimers

“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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