Cracks Are Appearing in the Credit Markets
Cracks are appearing in the credit markets and public funds investors should amp up risk management efforts or avoid the risks that could upend portfolio strategies at a time when economic uncertainty, falling short term interest rates and disruption to historic government funding could stress state and local government budgets. There are two stories here: […]
Bank CDs: Available for Investment, But is There Value?
States and localities have long invested in bank certificates of deposit because they are familiar, easy to acquire and may be viewed as serving the community. In most cases the issuing bank must collateralize the deposit, so CDs are viewed as having low risk. But changes in the bank business model may have made this […]
The Upcoming FOMC Meeting: Lower Rates Likely
The October meeting of the Federal Open Market Committee is likely to produce two results that will lower rates for public funds investors. • The Fed seems set to lower its main policy rate by 25 basis points. Rates for short-term investments like Treasury bills, commercial paper and collateralized certificates of deposit have already dropped […]
What to Expect in a Government Shutdown
I have no idea what the outcome of the government shutdown will be. There is no predicting, and any forecasts are laden with political overtones. But it seems useful to look back at the effects of the last prolonged shutdown, December 2018-January 2019, to see how the economy and financial markets responded. That shutdown lasted […]
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 […]