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HomeMy WebLinkAbout67072 (2)2013 ECONOMIC GOMMENTARY City of Palm Desert � � �� e` /'P(l%�1C1'Pl� �j eflll�E���%l1�)1� �.% LC��X�/'l The Federal Open Market Committee (FOMC} will meet next on October 29-30. The majority of FOMC members believe that the Fed will begin sca�ing down its bond-buying program this year. The Fed's failure to do so last month was a "relatively close call." The federal government shutdown, however, may cause a delay in scaling down if the Fed believes that the shutdown has added to economic weakness. Janet Yellen, a retired Berkeley economics professor and the Fed's Vice Chair, has been �ominated to replace Ben Bernanke as Chair of the Federal Reserve. If approved, Yelien's four-year term will begin on January 1, 2014. Professor Yellen is a Keynesian who has an expansive view of the Fed's role in the economy. She is a key architect of the Fed's "easy money" policies, which have had a modest effect on economic growth and employment. Yellen believes that the Fed should have acted more aggressively in printing money. Based on past history, the federal government shutdown should by resolved by October 17. Both parties are "grandstanding" for the 2014 mid-term elections. Roughly 500,000 nonessential federal workers have been furloughed. The overall effect on fourth-quarter economic growth should be minimal since delayed spending will be made up later in the quarter. Financial markets have reacted to the shutdown by dumping billions of dollars of U.S. Government debt. Some financial institutions have refused to accept U.S. short-term debt. .r�s ��, e.e..�z��: � City Treasurer ` Certified California Municipal Treasurer Thousands of Dollars Month-End Book Value Month-End Market Value Paper Gain (Loss) Prior Year Book Variance Interest Earnings Yield-To-Maturity Weighted Maturity (Days) Effective Duration �'`i��f'�2�X Capitai Markets Team City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey, J.D., M.B.A. Investment O 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. PORTFOLIO STATISTICS $ 204,899 $ 220,313 $ 220,370 $ 218,688 $ 209,809 $ 199,761 $ 204,899 $ 220,319 $ 220,373 $ 218,697 $ 209,821 $ 199,776 $ - $ 6 $ 3 $ 9 $ 12 $ 15 $ 5,3�iy $ 13,559 $ 14,565 $ 1,885 $ (8,277) $ (10,437) $ 51 $ 59 $ 59 $ 57 $ 53 $ 53 0.30% 0.31 % 0.32% 0.32% 0.32% 0.33% 1 12 26 26 29 29 0.00 0.00 0.00 0.01 0.01 0.01 All data as of September 30, 2013