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Liquidity Fund Monthly


Financial markets remain confident that lower interest rates are on the horizon, but the combination of a slower-than-hoped disinflationary pace and messaging from major central banks prompted a resetting of expectations around when the first cut will arrive. Increasingly, markets have priced in June as the likely timeline for that first move. This was reflected in generally higher rates across yield curves in both Europe and the US, while risk assets such as equities maintained momentum amid generally robust economic and company earnings data.

The global economy benefited from a pick-up in activity, although the US economy typically fared better than Europe. US inflation surprised on the high side of expectations but the slow decline in inflation was more than just a US narrative.

State Street EUR Liquidity LVNAV Fund

European Central Bank: The ECB Governing Council did not meet in February so policy rates were unchanged for the month.

Market Rates: One-month EURIBOR ticked down from 3.88% to 3.87%, while the 12-month rate rose to 3.75% from 3.57%. *

Macro: Headline eurozone annual inflation dipped to 2.6% in February from 2.8% in January, with the core rate down to 3.1% from 3.3%.

ECB Deposit Facility Rate: 4.00%
1-month Fund Yield (Gross): 3.97%
1-month Fund Yield (Net): 3.82%**

State Street GBP Liquidity LVNAV Fund

Bank of England: The Monetary Policy Committee left rates unchanged although two of the nine members wanted to raise rates and one voted for a cut.

Market Rates: The 1-month ICE Term SONIA rate was barely changed at 5.20% at the end of the month. *

Macro: Both headline and core annual CPI inflation were unchanged in January from a month earlier at 4.0% and 5.1%, respectively.

Bank Base Rate: 5.25%
1-month Fund Yield (Gross): 5.38%
1-month Fund Yield (Net): 5.18%**

State Street USD Liquidity LVNAV Fund

Federal Reserve: The Federal Open Market Committee left rates unchanged and cautioned against early rate cut expectations.

Market Rates: The 3-month US Treasury Bill yield rose by 2 basis points to 5.40% with the 12-month yield up more sharply to 5.01% from 4.72%. *

Macro: US headline annual CPI inflation fell to a still-higher-than-expected 3.1%, while the core rate – which excludes energy and food – remained at 3.9%.

Fed Funds Target Rate: 5.25% - 5.50%
1-month Fund Yield (Gross): 5.58%
1-month Fund Yield (Net): 5.38%**

State Street USD Treasury Liquidity Fund

Federal Reserve: Amid ‘sticky’ inflation, the Fed’s decision to leave rates unchanged was accompanied by guidance that eventual rate cuts will be at a gradual and incremental pace.

Market Rates: Among US Treasuries, the 1-month Treasury Bill yield ticked higher in February to 5.40% from 5.37%. *

Macro: Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation measure, fell from 2.9% to 2.8% in January.

Fed Funds Target Rate: 5.25% - 5.50%
1-month Fund Yield (Gross): 5.43%
1-month Fund Yield (Net): 5.23%**

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