Title
Receive and Accept the Treasurer's Report of Investments for the Quarter Ending March 31, 2023.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Receive and Accept the Treasurer's Report of Investments for the Quarter Ending March 31, 2023.
SUMMARY:
Government Code Section 53646 (b) (1) states the Treasurer may submit a quarterly report of investments. The attached exhibits provide a narrative portfolio review of economic and market conditions that support the investment activity during the January - March period, the investment portfolio position by investment type, and the investment portfolio by maturity range.
DISCUSSION:
Inflation has shown itself to be more entrenched than previously expected as the Federal Reserve's preferred price tracker inches lower but remains far elevated above their long-term average inflation target. Meanwhile, the broader outlook has become more uncertain following the announcement of two large bank failures and the takeover of a third. The Federal Reserve acknowledged the negative shock from the issues in the banking sector but remains committed to fighting inflation as they near the end of this rate hike cycle.
The Federal Reserve Summary of Economic Projections for March changed slightly from December, still projecting the federal funds rate to end 2023 just above 5%. While the current rate of 4.75% to 5.00% is still a 25 basis point (0.25%) hike away from that target, market expectations point to no additional rate hikes and a target rate lowered to 4.25% by the end of the year. Although the Federal Reserve has maintained that they will keep rates elevated for some time, the market is pricing in the slight chance of an economic downturn or worsening financial conditions.
On March 31, 2023, the Monterey County investment portfolio contained an amortized book value of $2,823,035,433 spread among 300 separate securities and funds. The par value of those funds was $2,846,291,249 with a market val...
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