As the concerns induced by bank-related jitters in March eased, investor appetite for risk improved. This was bolstered by a solid start to corporate earnings season and resilient economic data. Inflation remained well above central bank targets; headline rates are generally tracking lower on declining energy prices although core inflation has proved a bit stickier. Even as markets continued to price in policy rate hikes for May, there was a growing sense that the US Federal Reserve may pause thereafter while monetary policy in Europe may require more tightening before a terminal rate is reached.
Against this backdrop, there was some divergence in market rates between the US and Europe. While 10-year US Treasury yields dipped from 3.47% to 3.42%, similar-dated UK yields rose from 3.49% to 3.72%. Ten-year German yields ticked up modestly. Short-term cash rates generally moved higher to reflect expected policy tightening.
European Central Bank: In the absence of a meeting of the ECB’s Governing Council in April, policy rates were unchanged.
Market Rates: One-month EURIBOR rose to 3.05% from 2.92%, with the 3-month rate up to 3.27% from 3.04%. *
Macro: Headline inflation ticked up to 7.0% from 6.9% after a sharp fall in March. Core inflation (which excludes energy and food) edged off its record high to 5.6% in April.
ECB Deposit Facility Rate: 3.50%
1-month Fund Yield (Gross): 2.94%
1-month Fund Yield (Net): 2.79%**
Bank of England: The bank’s Monetary Policy Committee did not meet in April although markets priced in a rate hike for May.
Market Rates: The 1-month ICE Term SONIA rate rose from 4.17% to 4.34%, with the 12-month rate up from 4.58% to 4.81%.*
Macro: Annual CPI inflation remained in double digits, albeit while declining from 10.4% to 10.1% in March. The core rate was unchanged at 6.2%.
Bank Base Rate: 4.25%
1-month Fund Yield (Gross): 4.25%
1-month Fund Yield (Net): 4.05%**
Federal Reserve: With no meeting of the Federal Open Market Committee, policy rates were thus unchanged.
Market Rates: Rates rose amid mixed views on when rate cuts might materialize. The 3-month Treasury Bill yield climbed from 4.81% to 5.06%, with the 12-month up to 4.77% from 4.69%.*
Macro: US headline annual CPI inflation fell to 5.0% in March from 6.0%. The core rate ticked up to 5.6% from 5.5%.
Fed Funds Target Rate: 4.75% - 5.00%
1-month Fund Yield (Gross): 5.12%
1-month Fund Yield (Net): 4.92%**
Federal Reserve: As April progressed, markets firmed up expectations for a rate hike of 25bps at the Fed’s May meeting.
Market Rates: Amid debt ceiling concerns, investor preference for short-dated securities helped drive the 1-month US Treasury Bill yield as low as 3.3% before ending April at 4.19% (down from 4.58% in the month). *
Macro: Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation measure, eased in March with the annual rate slowing from 4.7% to 4.6%.
Fed Funds Target Rate: 4.75% - 5.00%
1-month Fund Yield (Gross): 4.94%
1-month Fund Yield (Net): 4.74%**
* Benchmark returns are unmanaged and do not reflect the deduction of any fees or expenses. Past performance is not a reliable indicator of future performance. Performance returns for periods of less than one year are not annualized. The performance figures contained herein are provided on a gross and net of fees basis. Gross of fees do not reflect and net of fees reflect the deduction of advisory or other fees which could reduce the return.
Benchmark returns reflect all items of income, gain and loss and the reinvestment of dividends and other income as applicable.
Source: SSGA/Bloomberg Finance LP, 30 April 2023.
** Please note that the net yield shown is for the Distributor Shares share class. If you wish to view other available share classes, please visit www.ssga.com/cash
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Germany: State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich, Germany ("State Street Global Advisors Germany"). T +49 (0)89 55878 400. State Street Global Advisors Germany is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. www.ssga.com
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For Investors in UK - Pooled Funds:
The Company has been registered for distribution in the UK pursuant to the UK’s temporary permissions regime under regulation 62 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019. The Company is directed at 'professional clients' in the UK (within the meaning of the rules of the Financial Services and Markets Act 2000) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Many of the protections provided by the UK regulatory system do not apply to the operation of the Company, and compensation will not be available under the UK Financial Services Compensation Scheme.
For Investors in Switzerland:
The collective investment scheme referred to herein is a collective investment scheme under Irish law. Prospective investors may obtain the current sales prospectus, the articles of incorporation, the simplified prospectuses as well as the latest annual and semi-annual report free of charge from the Swiss Representative and Paying agent, State Street Bank GmbH Munich, Zurich Branch, Beethovenstrasse 19, 8027 Zurich as well as from the main distributor in Switzerland, State Street Global Advisors AG, Beethovenstrasse 19, 8027 Zurich. Before investing please read the prospectus and the KID, copies of which can be obtained from the Swiss representative, or at www.SSGA.com or www.ssga.com.
Actively managed funds do not seek to replicate the performance of a specified index.
The fund is actively managed and may underperform its benchmarks. An investment in the fund is not appropriate for all investors and is not intended to be a complete investment program. Investing in the fund involves risks, including the risk that investors may receive little or no return on the investment or that investors may lose part or even all of the investment.
The views expressed in this material are the views of EMEA Portfolio Management Team through the period ended 10/04/2023 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Investing involves risk including the risk of loss of principal.
Past performance is not a reliable indicator of future performance.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
The above targets are estimates based on certain assumptions and analysis. There is no guarantee that the estimates will be achieved.
The information provided does not constitute investment advice as such term is defined under the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor's or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. This communication is directed at professional clients (this includes eligible counterparties as defined by the appropriate EU regulator, or applicable Swiss regulator, who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description (including retail clients) should not rely on this communication. These investments may have difficulty in liquidating an investment position without taking a significant discount from current market value, which can be a significant problem with certain lightly traded securities.
Please refer to the Fund’s latest Key Information Document (KID)/Key Investor Information Document (KIID) and Prospectus before making any final investment decision. The latest English version of the prospectus and the KID/KIID can be found at www.ssga.com. A summary of investor rights can be found here: https://www.ssga.com/library-content/products/fund-docs/summary-of-investor-rights/ssga-investors-rights-summary-template-non-etf-Lux.pdf
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Expiration Date: 31/05/2024