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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 responded to expected monetary and fiscal policy <br />• Yields on maturities between 2 years and 10 years rose 60-83 bps during the 4th quarter <br />• The yield curve disinversion continued and was flatter at the front end and positively sloped <br />beyond 1-year <br />• Yield spreads remained near historically tight levels across most sectors aided by robust demand <br />and strength in the economy <br />U.S. Treasury yields reacted to the market attempting to digest the potential impacts of the new <br />administration’s policy proposals. Areas of focus include taxes, tariffs, immigration, and deregulation, <br />which the market generally expects will result in more growth but larger budget deficits and higher <br />inflation. The culmination of both fiscal and monetary impulses led the Treasury curve steeper with the <br />2-year Treasury yield rising 60 bps in the quarter while longer 10-year Treasuries rose 79 bps. As a result <br />of the Treasury sell-off, total returns were negative for the period. Ongoing steepening of the yield curve <br />is expected in the first quarter of 2025, with higher volatility as both fiscal and monetary policy evolve. <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 $2,174,011 in net interest earnings over the reporting period, <br />up from $2,067,788 for the quarter ended September 30, 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 />for the fourth quarter are $36,265 and are paid out of total interest earnings. There is no additional budget <br />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.A. - Page 3 of 60 <br />8