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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 />Current Market Themes <br />Geopolitics has overtaken U.S. macro fundamentals as the market’s primary focus <br />Conflict in Iran has increased near-term inflation risks due to higher commodity prices <br />Unemployment rate remains stable with net new job creation near zero <br />Consumer spending and business investment continue to support growth, though momentum is <br />slowing <br /> <br />The Federal Reserve paused during both meetings in the first quarter, keeping rates at 3.50-3.75% <br />The median “dot plot” projection continues to show one 25 basis point cut in 2026, though individual <br />projections showed less easing <br />Fed Chair Powell acknowledged the path forward is complicated by geopolitical uncertainty, making <br />it more difficult for the Fed to balance its dual mandate <br /> <br />Rising front-end yields unwound the inversion in the Treasury curve <br />Rate cut expectations were pushed further out, lifting front-end yields <br />Escalating Middle East conflict drove a spike in volatility <br />Credit spreads widened from historically tight levels amid heavy supply and geopolitical pressure <br /> <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 />EQUITY IMPACT STATEMENT <br />All City actions are assessed for impact. Because this item is on the consent calendar, this section indicat <br />es assessment process, not findings. The anticipated impact of this policy, program, or action has been <br />assessed in the following ways: <br />Reviewed from similar or relevant past program or policy in Redwood City <br />Reviewed data related to a standard or emerging best practice <br />FISCAL IMPACT <br />The City’s portfolio with PFMAM received $2,833,757 in interest earnings over the quarterly reporting <br />period, up from $2,774,325 for the quarter ended December 31, 2025. All interest earnings <br />are allocated monthly through a preset methodology that spreads earnings to the appropriate funds. <br />Fees for PFMAM’s services for the quarter are $37,268 and are paid out of total interest earnings. There <br />is no additional budget appropriation required. <br />7.C. - Page 3 of 71 <br />19