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<br /> <br />Portfolio/Benchmark <br />Total <br />Return <br />Effective <br />Duration <br />Yield at <br />Market <br />Average <br />Maturity <br />Redwood City 0.34% 2.61 1.68% 2.72 years <br /> B of A ML 1-5 year U.S. Treasury <br />Index <br />0.29% 2.61 1.61% 2.79 years <br /> <br /> <br />The prevailing economic theme includes moderate growth expectations in the U.S. <br />and abroad, further improvements in the U.S. Labor market, healthy consumer <br />demand, and a stable corporate backdrop. Looking ahead, another rate hike by the <br />Federal Reserve is expected before the end of this year. The term for the Chair of the <br />Federal Reserve, Janet Yellen, will expire early next year and there will be four <br />openings on the board; PFM will assess the market implications of all new appointees <br />to the Board. The impact from the hurricanes in the southern U.S. will likely manifest <br />itself in weaker economic data for the fourth quarter; however, historically the effects <br />of weather-related events are typically short-lived and are often smoothed over by <br />subsequent recovery and rebuilding activity. On the policy front, the potential for tax <br />reform and the debt ceiling debate will resurface before the end of the year. <br /> <br />PFM will continue to favor Treasuries over Agencies except in government-only <br />accounts where current holdings will be maintained. Negotiable certificates of deposit <br />offer good value, especially in the 2-year and under maturity range, and asset backed <br />securities offer opportunities for modest incremental yield. PFM will continue to <br />monitor incoming economic data, federal policy, and sector relationships to identify <br />market opportunities. PFM has provided an in-depth market summary and <br />discussion on their investment strategy and outlook in the attached investment report. <br /> <br />ALTERNATIVES <br />The Council can ask staff to provide the investment report in a different format, or <br />to include different information. Staff could return at a future Council meeting <br />with an updated report. <br /> <br />FISCAL IMPACT <br />The City’s portfolio received $670,713 in net interest earnings over the last quarter. <br />All interest earnings are allocated monthly through a preset methodology that <br />spreads earnings to the appropriate funds. Fees for PFM’s services during this <br />period were $23,820, and are deducted from the total interest earnings. <br /> <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under CEQA as defined in CEQA Guidelines, section <br />15378, because it has no potential for resulting in either a direct or reasonably <br />foreseeable indirect physical change in the environment. <br /> <br /> <br /> <br />6.1.A. - Page 2