Title
a. Receive and Accept the Treasurer's Report of Investments for the Quarter Ending September 30, 2018.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Receive and Accept the Treasurer's Report of Investments for the Quarter Ending September 30, 2018.
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 July - September period, the investment portfolio position by investment type, and the investment portfolio by maturity range.
DISCUSSION:
During the July - September quarter, the yield curve remained flat as rates on shorter term yields have outpaced longer-term yields. The first quarter marked the tenth straight quarterly rise in the 2-year yield as the U.S. economy remained strong and the Federal Reserve's continued tightening monetary policy raised the federal funds target rate by 25 basis points for the third time during the calendar year. The U.S. economy is experiencing a strong labor market, core inflation is hitting the Fed's long-term target of 2% for the first time since 2012, and the economy is seeing record corporate profits which are driven in part by savings from tax cuts and a continued optimistic business outlook. The Federal Reserve expectations for growth and employment indicators support the Fed's continued pace of gradual rate hikes, however, potential headwinds exist in the form of geopolitical risks, tariffs, slower housing market momentum and rising interest rates.
On September 30, 2018, the Monterey County investment portfolio contained an amortized book value of $1,327,140,468 spread among 127 separate securities and funds. The par value of those funds was $1,331,217,570 with a market value of $1,323,210,567 or 99.7% of amortized book value. The portfolio's net earned income yield for the period was 1...
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