HomeMy WebLinkAbout69610 (2)2013
ECONOMIC COMMENTARY
City of Palm Desert
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The Federal Open Market Committee (FOMC) met on December 18, and
announced that it will be modestly "tapering" the amount of its future asset
purchases. Starting in January 2014, the Federal Reserve will reduce its monthly
purchases of Federal Agency mortgage-backed securities, and of longer-term
U.S. Treasuries, by $5 billion each. This reflects the FOMC's perception that
economic activity is expanding at a moderate pace, with improved labor market
conditions, and a lower unemployment rate. Inflation continues to run below the
Committee's two percent threshold.
The Treasury market reacted with a sharp seil-off, driving up the yield on a 10-
year Treasury Note to 2.92 percent, the highest level in three months. Investors
ciosed out positions that they had taken to hedge their bets that U.S. Government
debt would fall, due to the pull back of the Fed's stimulus program. Gold prices
also fell to a three-year low, based upon lower expectations of inflation.
The housing market shows some signs of stabilizing, but there are continued
concerns that a weakening in consumer confidence or another jump in mortgage
rates might spark more turbulence. In October, housing permits rose to the
highest level in five years, driven largely by demand for multifamily buildings,
such as apartments and condominiums. In September, housing prices rose in
most major U.S. cities, but at a slower pace than prior months.
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City Treasurer
* Certified California Municipa/ Treasurer
PORTFOLIO STATISTICS
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
$ 201,302 $ 202,645
$ 201,302 $ 202,645
$ - $ -
$ 6,521 $ 7,589
$ 49 $ 53
0.30% 0.31 %
1 1
0.00 0.00
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ital 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.
$ 204,899 $ 220,313 $ 220,370 $ 218,688
$ 204,899 $ 220,319 $ 220,373 $ 218,697
$ - $ 6 $ 3 $ 9
$ 5,909 $ 13,559 $ 14,565 $ 1,885
$ 51 $ 59 $ 59 $ 57
0.30% 0.31 % 0.32% 0.32%
1 12 26 26
0.00 0.00 0.00 0.01
All data as of November 30, 2013