HomeMy WebLinkAboutInvestment Report - October 2014 (2)City of Palm Desert
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ECONOMIC COMMENTARY
The Federal Open Market Committee (FOMC) met on October 29-30, and issued
a statement indicating that "Quantitative Easing 3," its monthly bond buying
program, had ended. The FOMC reaffirmed that it would be a "considerable
period" of time before it raised short-term interest rates. The futures market
has assigned a 19% probability to that happening in June 2015. Employment
and inflation trends are currently pulling the FOMC in different directions.
The U.S. economy is experiencing "solid job gains" while there is downward
pressure on oil prices and on inflation. These internal contradictions give the
FOMC leeway to wait on raising rates.
October was a volatile month for financial markets due to slowing global growth,
a stock market correction, the Ebola virus, and continued geopolitical unrest.
These conditions caused a "flight to quality" in the first half of the month with U.S.
Treasury yields falling close to their 2014 low. Positive economic news triggered
a bond market rally at the end of October.
Due to economic slowdowns in Europe and in China, the U.S. is currently the
"growth engine of the world economy." Many emerging economies that drove
global growth for much of the last 10 years, such as Brazil, Russia, and
South Africa, are now relying on the U.S. for growth. Deflationary fears in Europe
and in Japan are being stoked by falling commodities prices, weakening stock
markets, and declining bond yields.
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City Treasurer
* Certified California Municipal Treasurer
PORTFOLIO STATISTICS
2014
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Capital Markets Team
City Treasurer
Paul S. Gibson, C.C.M.T.
Deputy City Treasurer
Thomas W. Jeffrey, J.D., M.B.A.
Investment Objectives
The treasurer shall invest all
public monies in a manner
that ensures safety of
principal; sufficient liquidity
to finance the City's
expenditures; and the
highest yield possible after
the previous two objectives
have been met.
STATISTICS OCT-14 SEP-14 AUG-14
JUL-14
JUN-14 MAY-14
Thousands of Dollars
Month -End Book Value $
Month -End Market Value $
Paper Gain (Loss) $
Prior Year Book Variance $
Interest Earnings (W/O Cash; $
Yield -To -Maturity
Weighted Maturity (Days)
Effective Duration
196,104 $ 216,802 $ 224,372 $ 223,757 $ 226,492 $ 224,854
196,118 $ 216,815 $ 224,380 $ 223,761 $ 226,492 $ 224,854
14 $ 13 $ 8 $ 4 $ - $
(6,541) $ 11,903 $ 4,059 $ 3,387 $ 7,804 $ 15,045
75 $ 72 $ 60 $ 59 $ 55 $ 54
0.42% 0.41% 0.32% 0.31% 0.31% 0.30%
104 95 13 13 13 1
0.15 0.14 0.02 0.03 0.03 0.00
All data as of October 31, 2014