HomeMy WebLinkAbout61965 (2)2012
City of Palm Desert
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ECONOMIC COMMENTARY
The Federal Open Markei Committee met on December 11 and 12, and made
hvo significant announcements. First, the Fed will be doubling the amount of
money that it prints. In addition to its ongoing program of buying $40 billion per
month of mortgage-backed securities, the Fed will be buying $45 billion per
month of U.S. Treasury debt. The latter program replaces "Operation Twist,"
which used proceeds from the sales of short-term Treasuries to buy longer-
term debL Since the Fed has exhausted its inventory of short-term Treasuries,
the new buying program will be pure balance sheet expansion.
Second, in an effort to make this extraordinary expansion of the money supply
appear "moderate," the Fed announcetl numeric targets for the withdrawal of
liquidity. Fed policy would be tightened if: 1) unemployment fails below 6.5%;
or 2) in0ation rises above 2.5%. 8oth statistics are suspect, however, since
unemployment numbers do not include people who give up looking for work,
and "core" inFlation does not include food and energy (which Fed Chairman
Bernanke dismisses as "globally traded commodities"). Finally, since both
targets have been designed to be movable, they are essentially meaningless.
Treasury Secretary Geithner asked Congress to transfer its prerogative to raise
the debt ceiling to the President. U.S. creditors will probabty interpret lhis as a
sign that the U.S. Government has no intention of ever balancing its budget or
limiting its accumulation of unsustainable debt.
City Treasurer
Paul S. Gibson. C.C.M.T.
Deputy City Treasurer
Thomas W. Jeffrey, J.D., M.B.A.
The Veasurer shall invest all
public monies in a manner
that ensures safety of
principal; suficient liquidiry
to finance the Citys
expenditures; and the
highes[ yield possible after
the previous two objectives
have been met.
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City Treasurer
' Certified California Municipal Treasurer
�-End Book Value 5
rEnd Market Value $
rGain(Loss) $
YearBook Variance $
:st Earnings $
�To-Maturity
hted Maturity (Days)
[ive Duration
PORTFOLIO STATISTICS
194,781 $ • 195,056 $ 198,990 $ 206,754 $ 205,805 $ 216,803
194,809 $ 195,071 $ 199,032 $ 206,794 $ 205,845 $ 216,613
28 $ 15 $ 42 $ 40 $ 40 $ 10
1,165 $ (828) $ (6,063) $ 99 $ (7,578) $ (6,478
58 $ 64 $ 64 $ 71 $ 72 $ 75
0.37% 0.39% 0.39% 0.40% 0.42% 0.43°/
29 30 29 28 40 40
D.03 0.04 0.04 0.04 0.05 0.05
All data as of November 30, 2012