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Page 3 of 4 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />Treasury yields increase in response to economic data over the quarter <br />Yields on maturities between 2 and 10 years rose 13-20 basis points during the quarter <br />The yield curve has now been inverted for 24 months, the longest period in history <br />Spreads across most sectors remain near multi-year tights and represent market expectations for <br />a soft landing <br />The overall message from the June 30th investment report is that the Federal Reserve’s preferred inflation <br />measure showed progress toward the 2% target, labor markets moved into better balance, consumer <br />spending moderated but remains well positioned given strong wage growth, and markets continue to <br />anticipate a soft landing with reduced risk of recession. <br />Since the end of the quarter, the Federal Reserve, at their July 30-31 meeting, voted to hold the Fed Funds <br />target rate at its current range of 5.25% to 5.50%, where it has been since July 2023; however, during <br />Chairman Jerome Powell’s press conference, he indicated that a rate cut in September is “on the table” if <br />inflation data continue toward 2%. Although the market adjusted its rate cut expectations to now- <br />expecting only one to two rate cuts by the end of the year, the 2 Year Treasury yield declined by 66 basis <br />points to 4.057% as of August 9, 2024 from 4.720% on June 30, 2024, while the 10-Year Treasury yield <br />declined by 40 basis points to 3.94% as of August 9, 2024 from 4.343% on June 30, 2024. <br />PFMAM will continue to be selective when evaluating new issues in all sectors. PFMAM has provided an <br />in-depth market update in the attached investment report. <br />FISCAL IMPACT <br />The City’s portfolio with PFMAM received $1,902,604 in net interest earnings over the reporting period, <br />up from $1,699,829 for the quarter ended March 31, 2024. All interest earnings are allocated monthly <br />through a preset methodology that spreads earnings to the appropriate funds. Fees for PFMAM’s services <br />during this period were $35,169.26 up from $33,607.95 last quarter and are paid out of total interest <br />earnings. There is no additional budget appropriation required. <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA <br />Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably <br />foreseeable indirect physical change in the environment. <br />PUBLIC NOTICE <br />Public notification was achieved by posting the agenda, with the agenda items being listed, at least 72 <br />hours prior to the meeting. <br />6.B. - Page 3 of 65 <br />17