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 […]
Halftime: The Score for Public Funds Investments as of June 30
The first half of 2025 has been kind to public funds investors, delivering solid returns on short-term cash and historically high returns on longer-duration separate accounts. LGIP returns, while somewhat lower than in 2024, were close to generation highs, benefitting from the fact that the Federal Reserve has maintained an elevated federal funds rate. Individual […]
State and Local Government Investment Assets Continue to Grow Despite Economic and Fiscal Uncertainty
State and local government investment assets continued to expand in recent months, surpassing $4 trillion at the end of March, according to the Federal Reserve’s new quarterly report on the Financial Accounts of the United States. This was despite a rise in economic uncertainty and evidence of a fall-off in state and local government revenue […]
Repo: An Under-Appreciated Asset*
Repo—repurchase agreements if you will—is both simple and complex. Simple because once documentation is in place it’s quite easy to place a trade using a secure message, a trading platform or even—heaven forbid— a phone call. We used to joke that it was as simple as pushing the repo button. But the complexity is around […]