State and Local Government Investment Assets Show Growth Despite Economic and Fiscal Uncertainty
State and local government investment assets grew by $110 billion, to $4.1 trillion in the second quarter of 2025, a surprisingly strong pace given the high level of economic and political uncertainty. • The growth of three percent in the quarter and eight percent in the 12-month period extends a trend of expanding investment assets […]
Why the Yield on the 10-Year Treasury Matters
There are several reasons to keep a close eye on the yield of the 10-year Treasury note even though investing out 10 years is far beyond the horizon for most public funds portfolios. Ten-year Treasuries make up less than one percent of Treasury’s $37 trillion of outstanding debt. Yet the yield on this maturity has […]
Cliff Notes on the Upcoming Federal Open Market Committee Meeting
Next week’s meeting of the Federal Open Market Committee is almost certain to set short-term interest rates firmly on the road to lower. That much is given. But it will also mark the debut of a new, more political Fed and provide important guidance for investors to assess the forward path of the U.S. (and […]
The Jobs Number
I generally try to write about matters that are particularly relevant to public funds investors but this piece is more general. Macroeconomic matters affect us all. As I read through Congressional Budget Office analysis of the budget/deficit situation last week I was struck by the importance of underlying trends in population, labor force and productivity. […]
What to Do When the Fed Moves
The Federal Reserve is on the cusp of lowering short-term interest rates. Softening labor markets, inflation that has not (yet?) reacted to the new tariff regime and unrelenting political pressure from the Trump Administration are likely to lead the central bank to resume its easing later this month. (No, the Fed is not immune to […]
Waking Up to Lower Rates
Last week was supposed to be a big one for the financial markets, though perhaps not quite the way it turned out. A meeting of the Federal Open Market Committee and release of the monthly jobs report were on the schedule, and the smart money was betting that the Fed would pass on cutting […]
Supply, Supply, Supply
Supply. The short-term markets will be inundated with Treasury bills in coming months as the Treasury refills its cash account, manages seasonal revenue flows and…oh yes, funds the deficit. • The Treasury’s quarterly refunding announcement this week laid out a plan to increase issuance of Treasury bills and short-term notes—those maturing within five years—by nearly […]
Crypto: The Genius Act and More
Crypto, stablecoins, blockchain. I’ve hesitated to introduce these subjects into my writing because I think they are largely a distraction from what should be the prime focus of public funds investors, but the Genius Act, hailed by President Trump when he signed it last week as “making America the leader in digital assets” took me […]
What’s Behind the Decline in Growth of Public Funds Bank Deposits?
Bank deposits account for about 20% of the investment assets of state and local governments, a share that has declined in the recent years as local government investment pools and direct investment in Treasuries has grown. This concentration understates the importance of banks for smaller governments where deposits are often the only way to make […]
A New Bank Capital Rule: Why it Matters
In a nation of more than 4,500 depository institutions, why should it matter that Federal regulators have proposed a narrow rule that applies only to eight? The rule, proposed at the end of June by the Federal Reserve and other bank regulators, would ease the requirement that the largest banks maintain a capital buffer, with […]