Title
Receive and Accept the Treasurer's Report of Investments for the quarter ending September 30, 2013.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Receive and Accept the Treasurer's Report of Investments for the quarter ending September 30, 2013.
SUMMARY:
Government Code Section 53646 (b) (1) states the Treasurer may submit a quarterly report of investments. The attached Exhibit A provides a narrative portfolio review of economic and market conditions that support the investment activity during the July - September period. Exhibit B describes the investment portfolio position by investment type as of September 30, 2013. Exhibit C is a listing of historical Monterey County Treasury Pool yields versus benchmarks. Exhibit D describes the investment portfolio by maturity range, and Exhibit E is an overview of the short term funds that the Treasurer invests in overnight, liquid assets.
DISCUSSION:
During the July to September quarter, Treasury yields continued to rise steadily until the Federal Reserve announcement in mid-September. The announcement contradicted the bond market's expectation that the Federal Reserve would slow the rate of Treasury and Agency mortgage-backed securities purchases commonly known as "QE3". The QE3 program had been in place for the past year to put downward pressure on rates and support economic growth. In its statement explaining the decision, the Federal Reserve cited rising mortgage rates, persistently high unemployment, low inflation and fiscal policies that continue to restrain economic activity as factors in their decision to continue the program unabated. Investors reacted to the announcement by reversing their prior sell off so quickly that interest rates on the 10-Year Treasury note fell 15 basis points in yield within minutes of the announcement. By month end, yields on Treasuries in the 3 month - 3 Year range had fallen below their previous levels at the end of June.
On Septem...
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