Title
Receive and accept the Treasurer's Report of Investments for the quarter ending March 31, 2024.
Report
RECOMMENDATION:
Receive and accept the Treasurer's Report of Investments for the quarter ending March 31, 2024.
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 continued to moderate, but the pace has slowed. Core inflation (which excludes food and energy costs) remained above the Federal Reserve's 2% target. The latest reading of core Consumer Price Index (CPI) was 3.8%, for the 12 months ending February. The labor market remained resilient, with strong job gains and wage growth exceeding inflation. During the quarter, 829,000 jobs were added, and the unemployment rate was 3.8% as of March 31, 2024. Gross Domestic Product (GDP) for the quarter ended December 31, 2023, the latest available data, showed the U.S. economy grew 3.4%, on an annualized basis. Consumer spending continued to support growth. The current estimates of GDP for the quarter ended March 31, 2024, are around 2.8%.
The Federal Reserve Market Committee (FOMC) kept the target range unchanged at its March meeting. The FOMC's dot plot updated March 20, 2024, shows three rate cuts in 2024, the same as was shown in the December dot plot. Three rate cuts would bring the federal funds target rate to a range of 4.50%-4.75%. Market expectations are now more closely aligned to FOMC forecasts, three or four total cuts in 2024 are expected, which is down from the five or six originally priced in for this year. Federal funds futures now show the earliest likely interest rate cut could occur in July.
On March 31, 2024, the County of Monterey investme...
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