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City of Palm Desert
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ECONOMIC COMMENTARY
On March 19, Federal Open Market Committee Chair Yellen stated that the Fed
would probably raise short-term interest rates six months after its bond-buying
program ends. Yellen's comments implied that a rate increase might come as
early as April 2015 (investors were expecting late 2015). The resuit was a
change in the yield curve, with yields on two- and three-year Treasuries rising,
and yields on 30-year Treasuries falling. This reflected market perceptions of
higher short-term interest rates, and lower inflation risks. Two weeks later,
Yellen sought to reassure markets that the Fed would continue to keep
short-term interest rates low in order to support a weak job market.
The Fed is doing a delicate balancing act between supporting the economic
recovery and triggering another financiai bubble or inflation. According to
Wells Fargo Securities, the Fed's quantitative easings have boosted asset
prices (housing and stocks) more than they have the economy's underlying
fundamentals. Asset price increases are intended to encourage consumer
spending through a perceived "wealth effect." The U.S. economy does not
receive the full benefit of such spending, however, since most of the goods
being purchased are made in foreign countries (the U.S. is a net importer).
Fed minutes show that the Fed remains concerned about persistently low levels
of inflation. Tepid inflation is associated with low wage gains, excess business
capacity, and weak global demand. This restrains investment and hiring.
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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 (W/O Cash $
Yield-To-Maturity
Weighted Maturity (Days)
Effective Duration
PORTFOLIO STATISTICS
217,385 $ 220,165 $ 213,310 $
217,385 $ 220,165 $ 213,310 $
- $ - $ - $
19,442 $ 18,825 $ 15,125 $
53 $ 46 $ 48 $
0.31 % 0.29% 0.29%
1 1 1
0.00 0.00 0.00
All data as of March 31, 2014
208,660
208,660
16,574
47
0.28%
1
0.00
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Markets Team
City Treasurer
Paul S. Gibson, C.C.M.T.
Deputy City Treasurer
Thomas W. Jeffrey, J.D., M.B.A.
Investment Obiectives
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.
$ 201,302 $ 202,645
$ 201,302 $ 202,645
$ - $ -
$ 6,521 $ 7,589
$ 49 $ 53
0.30% 0.31 %
1 1
0.00 0.00