Title
Receive and Accept the Treasurer’s Report of Investments for the quarter ending September 30, 2012.
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, 2012.
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, 2012. 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 the Treasury bond curve continued to flatten in the 0 - 5 year term. Yields in maturities of a year or less were up slightly, while longer maturities were lower. The Federal Reserve announced the third version of their Quantitative Easing program, pledging to purchase $85 billion a month in agency-backed mortgage-backed securities and long term Treasuries. For the first time the Federal Reserve did not indicate a maximum size or duration of the program, instead choosing to tie the program to improvement in the labor market. In mid-September, the German Constitutional Court allowed the country to ratify the new bailout fund for the Euro zone, establishing the European Stability Mechanism which will lend money to European Union members in an effort to combat rising borrowing costs for its participants. All of these factors have helped contribute to continued investments in fixed income securities. The Fed has continued their assurances that they will keep the Fed Funds Rate at or below 0.25 percent.
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