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For the quarter in review the FTIF Templeton US Dollar Liquid Reserve Fund generated a return of 0.42%. Over
the period, short-term interest rates rose as the U.S. Treasury curve shifted upwards. The yield on current 3-
month T-Bill rose by 55 basis points from 2.21% to 2.77% and the 6-month yield increased by 54 basis points from
2.58% to 3.12%.
In the U.S., the Federal Reserve Board (the Fed) continued to raise interest rates gradually, or 25 basis points to
2.75%. However, the accompanying FOMC statement contained changes in rhetoric regarding inflationary
pressures, specifically from perceived increased pricing power, prompting concern among investors that the Fed
may be building an argument for an acceleration in interest rate hikes. Inflation data released during the month
continued to show gradual rise in underlying inflation, with core CPI rising to 2.4% year-on-year. Despite 175
basis points in Fed tightening during the current rate cycle, monetary policy remains accommodative and real
yields are still slightly negative. While short-term interest rates have been rising in step with Fed rate changes, 10-
year rates had been fairly resilient to the tightening interest rate environment. During the quarter, 10-year yields
rose 26 basis points to 4.22%, compared to only 10 basis point increase in the fourth quarter of last year.
Looking forward, we anticipate the Fed to continue to gradually remove the policy accommodation as growth
stabilizes around trend. As of quarter-end, the Fund's actual days to maturity were 36 days, compared to 10 days
at the end of the prior quarter. The Fund consists of high quality money market securities with maturities ranging
from overnight to one-year; approximately 57.13% is top-tier corporate debt, 24.40% in cash securities and
18.47% developed sovereign government/agency debt.
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