HomeMy WebLinkAbout69611 (2)2013
ECONOMIC COMMENTARY
City of Palm Desert
� �'
c��/'E�(,�'iX�/'f'/' J e/t!/�P��'l2�llf P�X�I'f
The Federal Open Market Committee (FOMC) wili meet next on January 28-29.
it is thought that the FOMC will continue "tapering," and will reduce its monthly
government bond purchases by another $10 billion, in the belief that consumer
spending and energy exports will support solid U.S. economic growth in 2014.
Short-term interest rates are not expected to rise until the second half of 2015.
The Fed's optimism foliows a dismal jobs report for December 2013.
Employment was projected to increase by 200,000 jobs in December -- it only
increased by 74,000 jobs. Many Fed officials have dismissed December as a
statistical aberration due to bad weather. While unemployment did fail from 7%
in November to 6.7% in December, this was due to 347,000 workers leaving the
workforce, unable to find work. If these workers were included in the
unemployment rate (pre-1994 method), then one economist estimated that the
actual unemployment rate would be 20% or higher (Great Depression level).
The workforce participation rate is currently at its lowest point in 36 years.
Wells Fargo Securities is forecasting subpar growth, low inflation, and more Fed
tapering in 2014. Economic growth is projected to be 2.4%, supported by a
modest gain in consumer spending. The yield curve will steepen, with the 10-year
Treasury note rising above 3%. New construction wi►I modestly benefit from an
improved housing market. Small businesses will continue to struggle with high
healthcare costs, and regulatory uncertainty particularly with respect to taxes.
✓R'11�.5. �JWZ, L�e✓%�✓�, �
City Treasurer
"' Certified California Municipal 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
$ 208,660 $ 201,302 $ 202,645
$ 208,660 $ 201,302 $ 202,645
$ - $ - $ -
$ 16,574 $ 6,521 $ 7,589
$ 47 $ 49 $ 53
0.28% 0.30% 0.31 %
1 1 1
0.00 0.00 0.00
�JPI��'l2 �l<
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 shali invest all
public monies in a manner
that ensures safety of
principal; sufficient liquidity
to finance the City's
expenditures; and the
highest yield possibte after
the previous two objectives
have been met.
$ 204,899 $ 220,313 $ 220,370
$ 204,899 $ 220,319 $ 220,373
$ - $ 6 $ 3
$ 5,909 $ 13,559 $ 14,565
$ 51 $ 59 $ 59
0.30% 0.31 % 0.32%
1 12 26
0.00 0.00 0.00
All data as of December 31, 2013