COUNCIL COMMUNICATION
TO: Honorable Mayor and Council
FROM: Jill Olsen, Administrative Services Director
SUBJECT:TItle
Investment Report as of September 30, 2024 (Jill Olsen)
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FUNDING SOURCE:
N/A
PURPOSE:
To provide the September 30, 2024, Investment Report to Council.
BACKGROUND:
This investment report conforms to the City's adopted Investment Policy, which includes allowable investments under State law. The investment objectives of the City include safety, liquidity and yield - in that order. Standards of care have been used in making investment decisions for the City. Investments are purchased with the intention to hold to maturity, generally follow a two-year ladder plan, and are held by an independent third-party custodian.
As of September 30, 2024, the weighted average rate of return for the City’s investment portfolio (excluding LGIP and JPMorgan Chase) was 3.35 percent with an average yield to maturity of 4.19 percent and the average years to maturity is 2.0 years. As a point of comparison, the current yield for the Arizona State Treasurer’s Local Government Investment Pool (LGIP) 700, which invests in medium-term securities backed by the U.S. Government, was 3.95 percent for the quarter ending September 30, 2024. The LGIP’s Pool 700 holdings are very similar to those of the City’s investment portfolio and therefore, provide a reasonable benchmark for comparison.
In the first quarter (of the fiscal year), unemployment in Arizona was at 3.5% in September with an unemployment rate of 4.2% in the Lake Havasu City - Kingman area. Arizona’s seasonally adjusted jobless rate of 3.5% was lower than the U.S. rate of 4.1%. Inflation is the principal driver of rates in terms of market acceptance. Income and sales growth are forecasted to slow in nominal terms this year. The recent deceleration of inflation implies continuing restrictive monetary policy and high, but potentially lower, interest rates this year, which will likely contribute to slower economic growth. The September Federal Reserve policy rate is at 4.75% to 5.00%, which is a half point lower than the prior rate. Supply chain disruptions have improved, but remain a concern.
COMMUNITY IMPACT:
No direct impact. Indirect impact to the community is an increase or decrease in investment earnings based on the market environment, which helps fund government and enterprise activities.
FISCAL IMPACT:
N/A
ATTACHMENTS:
Investment Report - September 30, 2024
SUGGESTED MOTION:Recommended Action
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