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money market accounts. We anticipate we will have two large tax settlements each year, <br /> along with the regularly-scheduled debt service payments. <br /> The Treasury yield curve has increased in short-term yields from December 30, 2016; <br /> however,yields for longer term investments have not experienced the same rate of increase. <br /> Most recent purchases have been credit quality certificates of deposits (CDs). CDs have <br /> been several basis points over agencies with call features. Investing in shorter-term <br /> investments has presented far fewer options since the decline in the commercial paper <br /> market. Three-month notes are yielding 0.76% and the 10-year notes are 2.40%. See the <br /> graphical illustration below: <br /> Treasury Yield Curve <br /> 3.50% - <br /> 3.00% - <br /> 2.50% — <br /> 2.00% - <br /> 12/30/16 <br /> 1.50% 3/31/17 <br /> 1.00% <br /> 0.50% — <br /> 0.00% <br /> 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr <br /> Cities generally use a short-horizon benchmark such as the two-year Treasury Bill (3/31 — <br /> 1.27%,with an increase from 1.2% on 12/30) or some similar measure. Our current <br /> portfolio yield is roughly 2.23%which is several basis points over the treasury yield <br /> benchmark. This is calculated by taking the yield times the current value for each investment <br /> and dividing the resulting amount by the total portfolio value. As investments purchased in <br /> earlier years mature,we will be able to replace them and lock into some longer term interest <br /> rates, but they may have to be reinvested at lower interest rates as market conditions change. <br /> It is typical to lag the market as interest rates change. This will lead to more predictability in <br /> our interest earnings. <br /> Our primary reserve account is our 4M Fund which is a money market account where many <br /> cities pool their funds. It currently yields 0.5%with daily withdrawal privileges. The city <br /> strives to maintain a strong diversification portfolio so liquidity and exposure risk are <br /> reduced. <br /> Attachments <br /> ■ Investment summary <br /> N:\Public Bodies\Agenda Packets\04-17-2017\Final\xInform2 sr Investment Report.docx <br />