Investment ReportPREPARED BY: STEVE CONWAY
Finance & Administrative Services Director/Town Treasurer
Reviewed by: Assistant Town Manager Town Attorney Finance
N:\MGR\AdminWorkFiles\2016 Council Reports\03-15-16\02 Investment Report\Investment_Report_-_Q2_2015_2016 FINAL.doc
MEETING DATE: 03/15/16
ITEM NO: 2
COUNCIL AGENDA REPORT
DATE: MARCH 10, 2016
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: SECOND QUARTER INVESTMENT REPORT (OCTOBER THROUGH
DECEMBER 2015) FOR FISCAL YEAR 2015/16
RECOMMENDATION:
Approve the attached Second Quarter Investment Report (October through December 2015) for Fiscal
Year 2015/16.
DISCUSSION:
Attached for Council consideration and approval is the Second Quarter Investment Report for FY
2015/16, for the period October through December 2015.
The Town’s weighted portfolio yield of 0.76% is still outperforming the Local Agency Investment
Fund (LAIF) yield of 0.40% (difference of 36 basis points). Therefore, staff continues to replace
matured or called investments with similar investments with respect to maturity and credit quality. For
the quarter, the Town’s weighted average rate of return decreased 5 basis points (0.05%).
In mid-December 2015, for the first time since before the financial crisis in 2008, the Federal Open
Markets Committee (FOMC) raised the Fed funds target rate. The Committee increased its benchmark
rate 0.25% to a range of 0.25% to 0.50%. The Fed funds target rate had remained at zero to 0.25% since
December, 2008. During this time, the FOMC also embarked on three rounds of asset purchases known
as quantitative easing which helped to lower interest rates and increase the money supply. FOMC chair
Janet Yellen indicated that economic conditions had improved enough to warrant an increase in interest
rates. Employment growth has been strong, and the unemployment rate has decreased by 50 %since its
high in October, 2009. Global commodity prices remain low and crude oil fell below $35 per barrel.
Over the past 18 months, the price of crude oil has dropped 64%t from $95 per barrel to $34 per barrel.
Market expectations were anticipating a Federal Reserve interest rate increase sometime in late
calendar year 2015 but that expectation was tempered by low inflation and a stock selloff in September
which may moderate any increases in interest rates in 2016.
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: SECOND QUARTER INVESTMENT REPORT (OCTOBER THROUGH
DECEMBER 2015) FOR FISCAL YEAR 2015/16
MARCH 10, 2016
DISCUSSION (cont.):
Staff is concentrating on short-term (two years or less in maturity) for its new investments as the
rewards for longer term investments in the three to five year maturity do not have adequate spreads to
justify the risk of holding longer term maturities.
FISCAL IMPACT:
None
Attachment:
1. Second Quarter Investment Report for FY 2015/16 (October through December 2015)