Title
Receive and Accept the Treasurer's Report of Investments for the Quarter Ending December 31, 2015.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Receive and Accept the Treasurer's Report of Investments for the Quarter Ending
December 31, 2015.
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 October - December period, the investment portfolio position by investment type, a listing of historical Monterey County Treasury Pool yields versus benchmarks, and the investment portfolio by maturity range.
DISCUSSION:
During the October - December quarter, yields on 2-year Treasuries began to increase based on the markets' expectation of a FOMC (Federal Open Market Committee) increase in the Fed Funds Rate. After being stuck at 0.00 - 0.25% for seven years, on December 16, 2015, the Fed decided to raise the target range for the federal funds rate to 0.25 - 0.50%. Their decision came after a period of recovery where the U.S. gross domestic product (GDP) grew by an average of 2.2%. Growth was broad-based, driven by inventories, fixed investment, imports, consumer spending and state and local government spending. However, the Committee also expressed that "economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate".
On December 31, 2015, the Monterey County investment portfolio contained an amortized book value of $1,308,756,427 spread among 87 separate securities and funds. The par value of those funds was $1,305,914,105, with a market value of $1,307,853,256 or 99.96% of amortized book value. The portfolio's net earned income yield for the period was 0.71%. The portfolio produced an estimated income of $1,961,614 for the quarter which will be distributed proportion...
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