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CalTRUST Announcements
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CalTRUST Preparing for Transition to New Service Providers
As announced in the April Newsletter, the CalTRUST Board of Trustees took action last month to select new service providers including: U.S. Bank to provide custody services (current provider is Wells Fargo); BlackRock to provide investment management services (current provider is Wells Fargo Asset Management); and NorthStar Financial Services Group, LLC to provide fund accounting services (current provider is Nottingham). These selections are all pending final contract review and approval. We understand that these are all critical functions of CalTRUST and want to ensure participants that they will all be transitioned in a thoughtful manner over the course of the summer. The tentative transition date for investment management and custody is July 3rd and the tentative transition date for fund accounting and record keeping services is August 1st. In June, all current CalTRUST participants will be contacted by either Laura Labanieh or Kyle Tanaka to discuss the transition and answer any questions. In the meantime, if you have any questions, please do not hesitate to contact CalTRUST Administrator Laura Labanieh at 916.650.8186 or laura@caltrust.org.
Governor's 'May Revision' Kicks Budget Season Into High Gear
Governor Jerry Brown released his updated 2017-18 budget proposal recently, showing modestly improved revenues - relative to January projections - but offering a sobering outlook for the near future.
In his initial budget release in January, the revenue forecast reflected a $5.8 billion reduction in General Fund revenues compared to the 2016-17 budget. Based largely on the surging stock market since early-November of last year, the May Revise shows a $2.5 billion increase in General Fund revenues.
While acknowledging this modestly improved fiscal picture, the Governor, nonetheless, pointed out that the future budget outlook "is considerably more constrained than in any year since 2012". To buttress his point, Governor Brown pointed to tougher budget times ahead, predicated on:
- Actions being considered at the federal level, which could seriously impair the budget, such as the "repeal and replace" of the Affordable Care Act, which could defund health care for up to 5 million Californians, and the elimination of the deductibility of state taxes which may be a part of federal tax reform; and
- The inevitability of a recession at some point in the future, as the economy is about to enter its ninth year of expansion following the Great Recession - just two years short of the longest recovery since World War II.
For
more information on the CalTRUST funds, please contact:
Laura Labanieh CSAC Finance Corporation |
(916) 650-8186
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Norman Coppinger League of CA Cities |
(916) 658-8277 |
Neil McCormick CA Special Districts Association |
(916) 442-7887 |
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Financial Markets Update
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"Normalizing" The Fed's Balance Sheet: The New Monetary Policy Challenge
In
their mid-April
Special Commentary
, the Wells Fargo Securities Economics Group (SEG), looks at the challenges facing the Fed as it begins the process of 'unwinding' its $4.5 trillion balance sheet, consisting of mostly Treasuries and mortgage-backed securities (MBS).
Based upon its guidance to-date, the Fed appears favor what the SEG terms a "passive approach".This entails reducing its holdings in a gradual and predictable manner - ceasing to reinvest proceeds of maturing securities. Since nearly half of its Treasury holdings mature between now and 2020, even a passive approach would significantly reduce the balance sheet in a reasonable time frame. It's a bit more complicated, however, when it comes to MBS holdings; the SEG believes the Fed will likely choose to reinvest a share of MBS proceeds to excessive shock to the MBS market.
In the view of the SEG, a more "activist approach" - involving outright sales of Treasuries, MBS or a combination of the two - might be triggered by either:
- A sharp change in the economic outlook - for example, a large fiscal stimulus package that ramps up growth and fuels inflation; or
- A shift in the make-up of the FOMC - five FOMC seats will come open within the next 15 months. A more hawkish Fed could take a more aggressive approach to reducing MBS holdings.
The complete
blog post
can be accessed
here.
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CalTRUST Portfolio Snapshot (as of April 30, 2017)
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1. CalTRUST Short-Term and Medium-Term and LAIF yields are net of fees. Merrill 1-5 Year Indexes are unmanaged; and do not reflect any deduction for administrative fees or expenses. 2. CalTRUST and LAIF returns are net of all investment advisor, administrative and program fees. 3. Annualized. 4. The CalTRUST Short-Term and Medium-Term portfolios commenced operations on February 13, 2005.
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CalTRUST Government & Heritage Money Market Funds
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Treasury Yield Curve
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2017 Calendar
May 26, 2017
Memorial Day Observed
Early Closure - 11:00 am PST
May 29, 2017
Memorial Day Observed
Closed for Trading
July 3, 2017
Independence Day Observed
Early Closure - 10:00 am PST
July 4, 2017
Independence Day Observed
Closed for Trading
September 4, 2017
Labor Day Observed
Closed for Trading
October 9, 2017
Columbus Day Observed
Bond Market Closed for Trading
November 23, 2017
Thanksgiving Day Observed
Closed for Trading
November 24, 2017
Thanksgiving Day Observed
Early Closure - 10:00 am PST
December 22, 2017
Christmas
Observed
Bond Market Early Closure - 11:00 am PST
December 25, 2017
Christmas Observed
Closed for Trading
December 29, 2017
New Year's Eve Observed
Bond Market Early Closure - 11:00 am PST
2018 Calendar
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January 1, 2018
New Year's Day Observed
Closed for Trading
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